ISSN 1936-5349 (print) ISSN 1936-5357 (online)

HARVARD JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS

MADE FOR THIS MOMENT: THE ENDURING RELEVANCE OF ADOLF BERLE'S

BELIEF IN A GLOBAL NEW DEAL

Leo E. Strine, Jr.

Discussion Paper No. 968

08/2018

Harvard Law School Cambridge, MA 02138

This paper can be downloaded without charge from:

The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center

The Social Science Research Network Electronic Paper Collection:

https://ssrn.com/abstract=3223450

Made For This Moment:

The Enduring Relevance of Adolf Berle’s

Belief In A Global New Deal

By

Leo E. Strine, Jr.*

Berle X: Berle And His World

May 17, 2018

The Adolf A. Berle, Jr.

Center on Corporations, Law & Society

Seattle University School of Law

Seattle, Washington

* Chief Justice, Delaware Supreme Court; Adjunct Professor of Law, University of Pennsylvania

Law School; Austin Wakeman Scott Lecturer in Law, Harvard Law School; Senior Fellow,

Harvard Program on Corporate Governance; and Henry Crown Fellow, Aspen Institute.

The author is grateful to Christine Balaguer, Kayla DeLeon, Peggy Pfeiffer, and Monica Smith

for their help, and to Martin Lipton, Miguel Padro, Frank Partnoy, and Robert Thompson for their

incisive comments.

I.

In this article, I discuss why Adolf Berle—who I call the good Adolf—would

not be surprised by the moment in which the United States, Great Britain, and the

European Union now find themselves. And most important, I will underscore why

Berle’s support for a global New Deal remains relevant, and even compelling.

Many now tagged with the label “globalist” have spent nearly two generations

globalizing a form of economics that Berle himself would have seen as outdated,

socially unsustainable, and likely to give rise to resentment.1 Examples of globalists

of this kind include recently resigned presidential economic advisor, Gary Cohn.

Cohn resigned over tariffs.2 But Cohn’s kind of commitment to spreading laissez-

faire economic policies is not characteristic of the sort of internationalist Berle was,

nor Franklin Delano Roosevelt or Winston Churchill. On the left, the term

globalization is often not viewed with favor, but as the word for spreading laissez-

faire capitalism, eroding social democracy, and advancing powerful business

1 Stanley Hoffmann, Clash of Globalizations, FOREIGN AFF., July–Aug. 2002, at 107 (“[E]conomic

globalization . . . results from recent revolutions in technology, information, trade, foreign

investment, and international business. The main actors are companies, investors, banks, and

private services industries, as well as states and international organizations.”). 2 Shawn Tully, Why Gary Cohn Was Right About Tariffs, FORTUNE (Mar. 7, 2018),

http://fortune.com/2018/03/07/gary-cohn-leaving-tariffs/ (“Cohn lost a battle with the ‘nationalist’

wing at the White House led by Peter Navarro, President Trump’s top adviser on trade. As the

president’s chief economic adviser, Cohn has proven an ardent free-trader who strongly opposed

Trump’s plan to impose heavy tariffs on steel and aluminum imports. When Trump took his

biggest concrete steps yet to deliver on his protectionist campaign promises, Cohn apparently quit

in protest.”).

2

interests over those of working people.3 Instead of a global New Deal, which Berle

ardently supported, the predominant force in international trade has been to spread

pre-New Deal, laissez-faire approaches to markets, without at the same time

extending with equal vigor the important features of regulation that Berle (and those

he influenced, notably FDR) considered essential to providing ordinary people the

economic security that they deserve and without which social stability could not

endure.4

3 E.g., Gordon Laxer, Radical Transformative Nationalisms Confront the US Empire, 51 CURRENT

SOC. 133, 139 (2003) (discussing the association of the term globalization with the spread of

capitalism worldwide and even with recolonization, and urging that national policies and a

movement for internationalism emerge to reverse what the author sees as the inequality and

environmental harm flowing from globalizing capitalism); Gordon Laxer, The Movement that

Dare Not Speak Its Name: The Return of Left Nationalism/Internationalism, 26 ALTERNATIVES 1

(2001) (discussing the Left’s frustration with “neo-globalists” who wish to globalize capitalism

and erode social democracy, and the fracturing it has caused on the Left about the utility of

internationalism versus retreating behind borders to address the resulting problems of globalizing

capitalism without correspondingly expanding regulation and protections for working people);

Amy Skonieczny, Interrupting Inevitability: Globalization and Resistance, 35 ALTERNATIVES 1

(2010) (discussing strategies for preventing the success of neo-globalists in advancing their

agenda); A.K. Thompson, Bringing the War Home: Anti-Globalization and the Search for “The

Local”, 51 BERKELEY J. SOC. 183 (2007) (advocating strategies for white middle-class activists to

undertake at the local level as a counterweight to neo-globalism); Roland Bleiker, The Politics of

Change: Why Global Democracy Needs Dissent, 9 GEO. J. INT’L AFF. 33 (2008) (arguing that

dissent against neo-globalization is important to building toward a fair form of internationalism

focused on global democracy and human rights). 4 WILLIAM K. TABB, ECONOMIC GOVERNANCE IN THE AGE OF GLOBALIZATION 91 (2004) (“In the

post-postwar years, globalization gained momentum as transnational corporations outgrew

national boundaries and the postwar strategies of promoting national champions proved a poor one

in the face of the greater efficiency of the transnational corporation.”); id. at 92–93 (“Globalization

reawakens the free market utopian dream of an unregulated economy. But once again income

polarization, social disintegration, and failed states unable to cope with anarchy of the global

marketplace call out for new regulation, a new phase in the double movement—this time to address

the neoclassical globalist utopian project. Corporate globalization’s logic is supported by the

formulation of free trade classical liberals who believe considerations such as labor rights and

environmental protection should remain at the GSEGI [global state economic governance

institution] policy level unrelated to trade and investment. Social protection is declared

3

Berle’s writing anticipated the present moment. He long recognized that if

the economy did not work for all, the worst impulses in humanity would be ripe for

exploitation by demagogues and authoritarians. Berle believed in international trade

and economic dynamism. But he understood that growth in each produced

instability, the potential for lost jobs, and genuine human insecurity that

governments, preferably working in concert, had the duty and capacity to address.

Davos Democrats and Brussels Social Democrats—“Davos Democrats” for

short—talk a high-minded game after getting off chartered flights to conferences

populated by the wealthy. Berle would not be surprised that they would lose working

class support, having failed to address the growing economic insecurity and

inequality in the American and EU economies. Occupying the odd position of being

on the political left at home and thus in the part of the political spectrum most

representative of the working and lower-middle classes, while being an important

force behind globalizing pre-New Deal capitalism abroad, center-left political elites

found themselves vulnerable to arguments that they were out of touch with the

protectionism, redistributive justice rent seeking, environmental concerns anti-business, and

democratic participation economically inefficient and in need of being precluded by international

agreements. The conflict between unfettered capitalism and social democracy is once again sharp,

even if unacknowledged in most mainstream discussion which frames the issues. Neoclassical

versions of the story deny the state role in the establishment of corporate globalization. It pictures

the creation of the capitalist market society as a free choice entered into for mutual advantage and

whose historical evolution is theorized to be the result of individual efficiency enhancing

activities.”).

4

concerns of ordinary people and focused on, for want of a better term, their own

“high class” problems.

Even less would Berle be surprised that unsavory, nativist forces would take

advantage of the insecurity of working people feeling that they were going

backward, while a small elite was growing much wealthier. That these forces would

blame these developments on foreign powers, immigrant workers, and open markets

would be all too familiar to him, having lived through the 1930s. That these forces

would be strengthened during the recovery from the Great Recession, which left the

best off with even more of the wealth, and the middle and working classes struggling

to get back to where they were, is something he would have expected.

Most of all, Berle would have feared that these forces would emerge

triumphant if there was not a forceful plan for action to address the profound

insecurity of the working and middle classes. To the extent that Berle ever criticized

FDR, it was because the New Deal did not go far enough.5 Berle did not believe in

retreating behind national borders. He believed in internationalism, but in an

5 Berle revered FDR, and although known for his own intellectual self-confidence, resolutely

defended FDR’s keen intelligence, careful study, and grasp of the key policies central to the New

Deal. Interview by James E. Sargent with Adolf A. Berle, Jr., in N.Y.C. (June 18, 1969), at 20‒

22 [hereinafter 1969 Interview with Berle]; Adolf A. Berle, Jr., Reshaping the American Economy,

9 CENTENNIAL REV. 209, 218 (1965) [hereinafter Reshaping the American Economy] (“Looking

back, it is clear that (despite contrary accusations) the President was over-cautious rather than

over-bold in his public works and allied programs. Had he, for example, financed the

reconstruction of cities in 1933 and 1934, as his government financed creation of an army, navy,

and air force and supporting services of supply from 1939 on, the problem might have been wholly,

instead of partially, met through peacetime instead of wartime employment.”).

5

internationalism that was robust and that involved globalizing the protections for

workers and the vulnerable that he viewed as critical to making capitalism work for

the many.6 Rather than a government that left those unsettled by a rapidly changing

economy to fend for themselves, Berle believed that government had both the duty

and capacity to help them find new work and to be secure.7

Berle would have grated to see the kernels of a positive message like “Make

America Great Again” deployed in aid of a nativist message premised on trade wars

and retrenchment. During his lifetime, Berle called on the United States to build a

fairer, more prosperous, and more just society. He viewed us as having an immense

capacity to invest our collective wealth in improving our society’s infrastructure and

cultural and educational institutions, and viewed those investments not just as

complementary to economic growth, but essential to it.8 And perhaps most relevant

6 See generally Adolf A. Berle, Jr., Government Function in a Stabilized National Economy, 33

AM. ECON. REV. 27 (1943) [hereinafter Government Function]; Adolf A. Berle, Jr., Private

Property in a Socialist World, 1946 A.B.A. SEC. REAL PROP. PROB. & TR. PROC. 48 [hereinafter

Private Property]; Adolf A. Berle, Jr., A Cooperative Union of Free Nations: Welfare of the

Masses the Primary Objective, 27 VITAL SPEECHES OF THE DAY 467 (1961) [hereinafter Welfare

of the Masses]; Adolf A. Berle, Jr., The Quest for Individual Security, 17 VITAL SPEECHES OF THE

DAY 406 (1951) [hereinafter The Quest for Individual Security]. 7 Reshaping the American Economy, supra note 5. 8 See generally Adolf A. Berle, Jr., Reflections on Financing Governmental Functions of the

Metropolis, 27 ACAD. POL. SCI. PROC. 66 (1960) [hereinafter Reflections on Financing

Governmental Functions of the Metropolis]; Adolf A. Berle, Property, Production and Revolution,

65 COLUM. L. REV. 1 (1965) [hereinafter Property, Production and Revolution]; Adolf A. Berle,

Jr., Constitutional Limitations on Corporate Activity—Protection of Personal Rights from Invasion

Through Economic Power, 100 U. PA. L. REV. 933 (1952) [hereinafter Constitutional Limitations

on Corporate Activity]; Reshaping the American Economy, supra note 5; Adolf A. Berle, Jr., And

What Shall We Do Then?, FORTUNE, Oct. 1941 [hereinafter And What Shall We Do Then?].

6

of all, Berle did not view American progress as a unique exercise in social

democracy to be done in isolation from our international neighbors.9 To the

contrary, Berle viewed it as vital that the United States promote what he called “free

democracy” internationally and that the enlightened form of capitalism associated

with the New Deal be expanded to cover the scope over which a globalizing

economy operated.10 He argued for the expansion and strengthening of international

institutions that would guarantee all humans the fundamental rights—all of them—

called for by FDR’s Four Freedoms Speech.11

9 See, e.g., Adolf A. Berle, Jr., The Coming Epoch of Rebuilding, 4 DEPT. OF STATE BULLETIN 611,

613 (1941) [hereinafter The Coming Epoch] (“[N]o nation exists by its own strength. If it lives at

all, it can do so only because it is part of an international fabric. . . . But if the single-unit nation

cannot make war alone, neither can it make peace alone. To live at all it must draw supplies from

every part of the world and must send back its own products. The foundation of national life is

thus international; and every laborer, factory manager, businessman, and statesman knows that this

is true.”); Adolf A. Berle, Jr., Cooperative Peace in the Western Hemisphere, 1 DEPT. OF STATE

BULLETIN 659, 661 (1939) (“It has long been recognized that economic forces are not strictly

national, just as it has long been recognized by all serious students that unless trade relationships

are unobstructed, the prosperity of any nation is limited, if not imperiled.”). 10 ADOLF A. BERLE, JR., NATURAL SELECTION OF POLITICAL FORCES 99 (1950) [hereinafter

NATURAL SELECTION OF POLITICAL FORCES]; see also Adolf A. Berle, Jr., Basic Elements in the

New World Crisis, 27 AM. SCHOLAR 423 (1958) [hereinafter Basic Elements]. Berle’s full-throated

denunciation of President Wilson’s failure (for among other reasons, his unwillingness to support

requirements for racial equality) to adhere to a principled plan for a post-World War I disarmament

and a League of Nations illustrates his view that the U.S. had a duty to support an international

system that worked for all nations, not just itself. Adolf A. Berle, Jr., The Betrayal at Paris, 109

THE NATION 170 (1919); see also Adolf A. Berle, Jr., Our Undeclared War, 23 NEW REPUBLIC 92

(1920). 11 Franklin D. Roosevelt, Annual Message to Congress: State of the Union Address (Jan. 6, 1941),

http://www.presidency.ucsb.edu/ws/index.php?pid=16092 [hereinafter Four Freedoms Speech]

(“In the future days which we seek to make secure, we look forward to a world founded upon four

essential human freedoms. The first is freedom of speech and expression—everywhere in the

world. The second is freedom of every person to worship God in his own way—everywhere in

the world. The third is freedom from want—which, translated into world terms, means economic

understandings which will secure to every nation a healthy peace time life for its inhabitants—

7

Because Berle was a realist, a believer in facts, and an optimist, one senses

that he would now be arguing for a muscular and bold international agenda to

increase the security of working people in the developed world while simultaneously

strengthening trade and opportunities for people in the developing world.12 From

Berle’s writings, it seems likely that the rights and needs of working people would

be central to his focus, with support for stronger minimum wages appropriate to the

conditions of different tiers of the world economy, guarantees for workers to bargain

for higher wages, and protections against child labor, unfair hours, and unsafe

working conditions at the top of his agenda.13 So fairer trade would ensue, workers

everywhere in the world. The fourth is freedom from fear—which, translated into world terms,

means a world-wide reduction of armaments to such a point and in such a thorough fashion that

no nation will be in a position to commit an act of physical aggression against any neighbor—

anywhere in the world.”); see generally Basic Elements, supra note 10; Adolf A. Berle, Jr., The

Soviet-Chinese Complex, 294 ANNALS OF THE AMERICAN ACADEMY OF POLITICAL AND SOCIAL

SCIENCE, AMERICA AND A NEW ASIA 56 (1954) [hereinafter The Soviet-Chinese Complex]. 12 See generally Basic Elements, supra note 10; Adolf A. Berle, Jr., Expansion and Values, 17 AM.

SCHOLAR 231 (1948) [hereinafter Expansion and Values]; Adolf A. Berle, Jr., The Soviet-Chinese

Complex, supra note 11; Adolf A. Berle, Jr., Peace Without Empire, 30 SURVEY GRAPHIC 506

(1942) [hereinafter Peace Without Empire]. 13 For example, in 1941, before the U.S. had even formally entered WWII, Berle was already

anticipating the post-war economy with characteristic optimism and confidence:

There is no need for fear. Rather, we shall have an opportunity to create the most

brilliant economic epoch the U.S. has yet seen. It is entirely feasible to make the

country at once more prosperous and more free than it has ever been. We shall

have in our hands the tools by which we can create a greater measure of economic

justice, without sacrificing any of the essential freedoms.

And What Shall We Do Then?, supra note 8, at 102 (emphasis added); see generally Reshaping

the American Economy, supra note 5, at 219 (“[I]t is hard even to imagine the possibility of having

an economy . . . without minimum wage laws and social security.”); Welfare of the Masses, supra

note 6, at 469 (arguing that “assur[ing] that increased production shall benefit everyone is a social

8

everywhere would have more leverage to gain higher wages, and pressures to

offshore jobs solely to exploit cheap and unfairly treated labor would diminish.

Always clear-eyed about the costs of economic dynamism, Berle voiced in his

lifetime the still relevant concern that government has a duty to help employees

transition to new forms of employment.14 And Berle recognized that one way that

government could facilitate economic growth and opportunity was by marshaling

society’s productive capacity to build and improve needed infrastructure.15 Thus,

Berle would have grasped the obvious opportunity for the United States and its

OECD allies to revitalize its core infrastructure, and thereby create good jobs at

home, train workers in new skills, and meet the challenges presented by climate

change. Finally, Berle understood that the privileged few should be expected to pay

task” that requires “the right of free labor to secure for workmen a fair share through wages and

social insurance”); The Quest for Individual Security, supra note 6, at 407 (arguing that social

security should “be gradually extended on a modest scale until substantially everyone who really

wishes to work will be covered by the government minimum,” and that there should be a “modest,

universally applicable pension for old age, and a modest cushion for unemployment”);

Government Function, supra note 6, at 27 (calling for “an attempt to assure substantially general

opportunity for useful work at adequate pay”); Adolf A. Berle, Jr., The Duties and Obligations of

American Citizenship, 10 DEPT. OF STATE BULLETIN 281 (1944) (“The day of the exploiter is gone,

and exploitation can be no part of American policy. The success of American enterprise outside

the United States will be measured even more by the working-conditions it creates, by the health

and homes of its employees, and by the growing capacity of the people with which it works, than

by the mere size of its profit-account piling up in banks in New York or Chicago.”). 14 See generally Government Function, supra note 6; And What Shall We Do Then?, supra note 8. 15 See generally id.; Reflections on Financing Governmental Functions of the Metropolis, supra

note 8; Reshaping the American Economy, supra note 5; And What Shall We Do Then?, supra note

8.

9

taxes to cover the costs of running a society in a fair and balanced manner,16 and

would view the U.S. as well positioned to pay for needed action, simply by asking

the wealthy winners to pay their fair share and by enacting Pigouvian taxes that

reduce the risks of financial speculation and the use of carbon.

In this article, I will give you solid examples of why I see Berle’s thinking as

relevant to the current moment. I will start by highlighting Berle’s sharp focus on

economic security for ordinary people, lest society become unfair and the worst

elements of human nature be subject to exploitation by authoritarian demagogues.

Next, I will underscore Berle’s belief that government has the duty and capacity to

manage the economy in a way that spreads the blessings of capitalism fairly.17 I will

then discuss Berle’s support for a global New Deal and the expansion of international

institutions that would extend the enlightened form of capitalism the New Deal and

European social democracy exemplified to all parts of the globe connected to

international trade. In doing so, I will note Berle’s view that retrenchment beyond

national boundaries, although having a potent political appeal, was not an answer to

the anxiety raised by a globalizing economy, but instead that the answer was making

sure that as the scope of the effective economy expanded across national lines, so

16 See generally Property, Production and Revolution, supra note 8; Adolf A. Berle, Penrose

Memorial Lecture: The Laws of Power: An Approach to Its Systematic Study, 11 AM. PHIL. SOC’Y

PROC. 249 (1967). 17 See generally Adolf A. Berle, Jr., The Modern Corporation in the Modern State, 8 BUS. LAW. 3

(1952); Adolf A. Berle, Jr., Concentration of Economic Power and Protection of Freedom of

Expression, 300 ANNALS OF THE AM. ACAD. OF POL. & SOC. SCI. 20 (1955).

10

did the protections needed to address the economic security of working people.18

Finally, in concluding, I will identify in Berle’s writing, support for many of the

initiatives that are now relevant to increasing support among working people for

international trade and to ensuring that the advances for working people

accomplished by the New Deal and social democracy are preserved and extended to

working people in developing nations. Berle’s focus on universally applicable

principles is especially important to the present moment,19 where there is a natural

inclination to focus solely on the local, given the difficulty of national, much less,

international action. By focusing on local and national solutions that, with

appropriate adaptation, can be applied universally across the global economy, those

committed to the kind of fair economy that Berle desired can make progress and

increase the international ties that are necessary if a global New Deal is ever to

become a reality.

II.

The present moment echoes the period in which Berle became an influential

government advisor. In the early 1930s, the American and European economies

were struggling with the Great Depression. As a result of great economic change,

there was growing inequality in the United States, even before the Crash.20 A class

18 See generally Basic Elements, supra note 10. 19 See generally NATURAL SELECTION OF POLITICAL FORCES, supra note 10. 20 JACK LAWRENCE LUZKOW, THE GREAT FORGETTING: THE PAST, PRESENT AND FUTURE OF

SOCIAL DEMOCRACY AND THE WELFARE STATE 143 (2015) (noting that in the 1920s, “the

11

of the super-wealthy and very affluent had emerged in the “Roaring 20’s,” while

working people were still struggling to obtain rights we now think of as standard,

such as protections against child labor, excessive hours, and unsafe working

conditions.21 Things like the minimum wage did not exist as national policy and the

right of workers to unionize was still not protected by law.22 After the Crash,

genuine poverty and high unemployment ensued, leading to demands for action.23

concentration of wealth in the hands of few achieved excessive levels, producing almost

unprecedented social inequality”). 21 We take these things for granted now. But, mainstream business voices viewed them as radical

and dangerous. See, e.g., Press Comment on Wages and Hours Bill, N.Y. TIMES, June 14, 1938,

at 4 (Alfred P. Sloan Jr., chairman of General Motors, predicting “that enactment of the [Wages

and Hours Bill] will lead to further unemployment and will penalize the very group that it is

supposed to help”). 22 Franklin D. Roosevelt, Fireside Chat (June 24, 1938),

www.presidency.ucsb.edu/ws/?pid=15662 (“After many requests on my part the Congress passed

a Fair Labor Standards Act, commonly called the Wages and Hours Bill. That Act—applying to

products in interstate commerce—ends child labor, sets a floor below wages and a ceiling over

hours of labor. Except perhaps for the Social Security Act, it is the most far-reaching, far-sighted

program for the benefit of workers ever adopted here or in any other country. Without question it

starts us toward a better standard of living and increases purchasing power to buy the products of

farm and factory.”). 23 Government Function, supra note 6, at 28–29 (“In 1929, when a new depression, likewise

beyond the control of any individual or group of individuals or any set of private enterprises,

resulted in the dislocation of a group of workers loosely estimated at eleven million, to which must

be added the distress of farming communities aggregating not less than four or five million more

active workers, the then government attempted to deal with the situation without direct entry into

the field. Local governments, of course, were forced into the task of relief, and a number of them

in one way or another attempted direct re-employment; and the government itself attempted

provision through programs of “share the work” and through indirect programs of encouraging

large business to undertake programs of expansion offering the hope of re-employment. These

measures proved insufficient and the political and governmental pressures resulting made it

inevitable that there should be a major change in the situation. In result, in 1933 the federal

government assumed responsibility and undertook the task of gradually providing for the

economic welfare of substantially every American. Failure to do so would, in my judgment,

inevitably have resulted in even greater political pressure. In retrospect, it is sufficiently plain that

this pressure would have been applied quite irrespective of the party affiliations or ideology of the

administration”); 1969 Interview with Berle, supra note 5, at 9 (discussing the Crash and noting

12

When these conditions were then compounded by the Depression, they were

exploited by forces in the U.S. and abroad that were not as benign as FDR, Frances

Perkins, and Lord Maynard Keynes. Right wing fascists of various degrees of evil

used these conditions to rally nativist sentiment against elites in the world

economy,24 most particularly targeting successful Jews, and to urge nationalist and

authoritarian solutions to the Depression.25 The U.S. was by no means immune from

that “the American public was not at all in a revolutionary mood. They didn’t want to overthrow

the government, they wanted to go to work. They didn’t want to abolish private property, they

just wished they had some for themselves.”). 24 See generally Lorraine Boissoneault, The True Story of the Reichstag Fire and the Nazi Rise to

Power, SMITHSONIAN.COM (Feb. 21, 2017), https://www.smithsonianmag.com/history/true-story-

reichstag-fire-and-nazis-rise-power180962240/ (“Despite its considerable growth, the Nazi party

won only 2.6 percent of the vote in the 1928 election. But then the Great Depression hit, sending

the U.S. and Europe into an economic tailspin and shooting the number of unemployed up to 6

million people in Germany (around 30 percent of the population). The sudden slump caused

massive social upheaval, which the Nazis exploited to gain further political traction. By 1930, the

Nazis won 18.3 percent of the Reichstag vote and became the second largest party after the Social

Democrats, while the Communist party also grew to ten percent of the vote.”); Caleb Crain,

Merchants of Doom, NEW YORKER 92 (May 14, 2018) (“For the next few decades [following the

Great Depression], the world’s leading economies were tightly managed by their governments. . . .

The memory of the financial chaos of the thirties, and of the fascism that it gave rise to, was still

vivid, and the Soviet Union loomed as an alternative, should the Western democracies fail to treat

their workers well.”). 25 Government Function, supra note 6, at 33–34 (“Clear economic thinking in these situations

should make it plain that the area of interest between private enterprise and government is vastly

greater than any minor area of conflict. Certainly, when the impulsion is as great as that which

will be on us after the present World War, a failure to meet the situation is far more likely to

destroy alike private enterprise and the chance of individuals to enjoy free choice of life. With the

relatively minor adjustments and readjustments which had to be made up to 1921, governments

could weather a period of distress. Impulsions as great as those of the depression of 1929 forced

a considerable change in theory. The hydraulic impact of the pressures which will exist after the

World War, if they are not met by common action, may produce reactions so great as to force

direct intervention in many if not all fields.”); id. at 34 (“This was the experience of most

governments in Europe following the first World War. It led directly to change not only of

governments (which might be merely political) but also to a change of the economic theory on

which governments were based, respectively in Italy, Germany, and many of the Balkan countries,

and very considerably shifted the area of British governmental action. In most of these cases the

13

these forces, as we know,26 and it is one of the signal achievements of American

history that FDR preserved both our market economy and democracy, while

responding to the legitimate economic fears of working people.

Berle was one of the strongest voices urging FDR to address the link between

economic insecurity and the potential for the darker elements of human nature to

find political success. In 1965, he described his thinking at that time this way:

No doubt economic forces left to themselves would “eventually”

establish a balance—but the human cost of the process in 1933 had

become intolerable. Continued, the vast and spreading misery could

even threaten the foundations of the American State. Millions do not

lose their jobs, their homes, and the necessities of life and see their

wives and children in hunger in sweet reasonableness. Also, the

phenomenon had become irrational. Great surpluses of goods had built

up on one side of an economic plate glass window. They were there—

in warehouses or grain elevators—while masses of hungry men looked

at them in growing despair. Means had to be found to connect the

supply with the need. An economic system is, of necessity, a man-

made system; what men make, they can alter. If to keep the service of

violence of the result was due to an attempt by certain interests to resist the impulsion and the

measures towards which the government was forced, instead of an endeavor to work out the

situation by taking account of all of the elements and endeavoring to assign to them different

spheres of action, or to effect a frank co-operation so that the impulsions might be accurately and

definitely met.”). 26 By way of example, think of Father Coughlin, a Canadian-born cleric and “new kind of

evangelical populist,” who criticized “America’s failed economic system” in his radio broadcasts

beginning in 1926. MICHAEL KAZIN, THE POPULIST PERSUASION: AN AMERICAN HISTORY 119

(1995). Although Coughlin “had vigorously backed Roosevelt as a true foe of ‘the money

changers,’” during FDR’s 1932 campaign, by 1934, he no longer supported FDR or the New Deal:

“[a]ccording to Coughlin, the New Deal, the Soviets, and modern capitalism had one essential

quality in common: the drive to centralize power in the hands of a privileged few—whether liberal

bureaucrats, international bankers, or atheistic tyrants.” Id. at 123. As World War II approached,

Coughlin’s message became more focused on anti-Semitism, a message that linked to his earlier

association of Jews with the international elites who he argued were the source of economic

troubles for Americans. Id. at 131–33.

14

supply going, the gods of the free market had to be dethroned,

dethroned they must be.27

My own first memorandum to him (May of 1932) was predicated on

the theory that the millions of individuals and families in distress were

probably the key to the situation; if we could make these families

reasonably secure in current income, in such savings as they still had,

in their jobs, and give them some confidence in the economic future,

they would cease to be frightened hoarders of cash, would resume

consumption, and would thereby reactivate manufacture and

production, for, as I wrote: “Both as a matter of sound economics and

decent humanity, an economic policy of the government ought to be

adopted towards the restoration of individual safety,” and I suggested a

series of concrete measures. All connoted the entry of the federal

government into fields it had, theretofore, considered outside its

function.28

And “security” is in fact the right word, and one that has a natural relation to

anxiety, as anxiety is what happens when people feel insecure about their

fundamental ability to find a job and provide for themselves. From FDR’s famous

words that the only thing Americans had to fear was fear itself,29 to the enactment of

a system of “social security” to take away the anxiety of being old and without food,

27 Reshaping the American Economy, supra note 5, at 211. 28 Id. at 213. 29 Franklin D. Roosevelt, Inaugural Address (Mar. 4, 1933),

https://fdrlibrary.org/documents/356632/390886/First+Inagural+Address+Curriculum+Hub+Doc

uments.pdf/55c42890-6b80-4d34-b68a-b4a30f2797d5 (“This is preeminently the time to speak

the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions

in our country today. This great nation will endure as it has endured, will revive and will prosper.

So first of all let me assert my firm belief that the only thing we have to fear is fear itself—

nameless, unreasoning, unjustified terror which paralyzes needed efforts to covert retreat into

advance. In every dark hour of our national life a leadership of frankness and vigor has met with

that understanding and support of the people themselves which is essential to victory. I am

convinced that you will again give that support to leadership in these critical days.”).

15

to FDR’s call for a global New Deal,30 the economic plans that Berle urged FDR to

adopt were all premised on making sure that everyone shared in the blessings of a

productive society, and that certain rights were recognized as essential to human

dignity and a fair society. Or as Berle himself put it, “the desire for individual

security is a constant in world history. It has always been so; it will always be so.”31

Recognizing that two world wars had their origins in no small part in

exploitation of the resentments that accompanied economic dislocations in a rapidly

changing world economy, FDR, with Berle’s full support, believed it was essential

to universalize the focus on economic security at the heart of the New Deal, and to

make it the basis for a durable world order based on a commitment to increasing

prosperity for the benefit of the many. FDR emphasized this in his Four Freedoms

Speech, where he famously included:

[F]reedom from want—which, translated into world terms, means

economic understandings which will secure to every nation a healthy

peacetime life for its inhabitants—everywhere in the world.32

30 See Daniel J. Whelan & Jack Donnelly, The West, Economic and Social Rights, and the Global

Human Rights Regime: Setting the Record Straight, 29 HUM. RTS. Q. 908, 924–27 (2007) (tracing

the evolution of FDR’s “Four Freedoms” to an “Economic Bill of Rights,” domestic principles

that “emerged from a synthesis of New Deal reform with an appreciation of the need to develop

an account of liberal democracy that would respond to the threats from fascism and communism,”

and internationalized in the Universal Declaration of Rights (quoting CASS R. SUNSTEIN, THE

SECOND BILL OF RIGHTS: FDR’S UNFINISHED REVOLUTION AND WHY WE NEED IT MORE THAN

EVER 65 (2004)). 31 The Quest for Individual Security, supra note 6, at 406. 32 Four Freedoms Speech, supra note 11.

16

In the present moment, the Four Freedoms speech has a special resonance

because it highlights the gap between what FDR, Berle, and others believed to be

the goal, and what has happened since.

In that same speech in 1941, FDR linked the lack of economic security to the

World War then-occurring and in which the U.S. was soon to be embroiled itself.

Certainly this is no time for any of us to stop thinking about the social

and economic problems which are the root cause of the social

revolution which is today a supreme factor in the world.

For there is nothing mysterious about the foundations of a healthy and

strong democracy. The basic things expected by our people of their

political and economic systems are simple. They are:

Equality of opportunity for youth and for others.

Jobs for those who can work.

Security for those who need it.

The ending of special privilege for the few.

The preservation of civil liberties for all.

The enjoyment . . . the enjoyment of the fruits of scientific progress in

a wider and constantly rising standard of living.

These are the simple, the basic things that must never be lost sight of in

the turmoil and unbelievable complexity of our modern world. The

inner and abiding strength of our economic and political systems is

dependent upon the degree to which they fulfill these expectations.

Many subjects connected with our social economy call for immediate

improvement.

As examples:

17

We should bring more citizens under the coverage of old-age pensions

and unemployment insurance.

We should widen the opportunities for adequate medical care.

We should plan a better system by which persons deserving or needing

gainful employment may obtain it.

I have called for personal sacrifice. And I am assured of the willingness

of almost all Americans to respond to that call.

A part of the sacrifice means the payment of more money in taxes. . . .

[T]he principle of tax payments in accordance with ability to pay should

be constantly before our eyes to guide our legislation.33

FDR repeated the key themes of his Four Freedoms speech in his 1944 State

of the Union Address:

In our day these economic truths have become accepted as self-evident.

We have accepted, so to speak, a second Bill of Rights under which a

new basis of security and prosperity can be established for all regardless

of station, race, or creed.

Among these are:

The right to a useful and remunerative job in the industries or shops or

farms or mines of the Nation;

The right to earn enough to provide adequate food and clothing and

recreation;

The right of every farmer to raise and sell his products at a return which

will give him and his family a decent living;

33 Id.

18

The right of every businessman, large and small, to trade in an

atmosphere of freedom from unfair competition and domination by

monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and

enjoy good health;

The right to adequate protection from the economic fears of old age,

sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be

prepared to move forward, in the implementation of these rights, to new

goals of human happiness and well-being.

America’s own rightful place in the world depends in large part upon

how fully these and similar rights have been carried into practice for

our citizens. For unless there is security here at home there cannot be

lasting peace in the world.34

34 Franklin D. Roosevelt, Annual Message to Congress: State of the Union Address (Jan. 11, 1944),

http://www.presidency.ucsb.edu/ws/index.php?pid=16518. In this speech, FDR essentially called

for a global New Deal. Id. (“The best interests of each nation, large and small, demand that all

freedom-loving nations join together in a just and durable system of peace. . . . And an equally

basic essential to peace—permanent peace—is a decent standard of living for all individual men

and women and children in all nations.”). FDR’s 1944 State of the Union Address was influential

to the Declaration of Human Rights. Compare id., with G.A. Res. 217 (III) A, Universal

Declaration of Human Rights, art. 22 (Dec. 10, 1948) (“Everyone, as a member of society, has the

right to social security and is entitled to realization, through national effort and international co-

operation and in accordance with the organization and resources of each State, of the economic,

social and cultural rights indispensable for his dignity and the free development of his

personality.”), and id. art. 23 (“1. Everyone has the right to work, to free choice of employment,

to just and favourable conditions of work and to protection against unemployment. 2. Everyone,

without any discrimination, has the right to equal pay for equal work. 3. Everyone who works has

the right to just and favourable remuneration ensuring for himself and his family an existence

worthy of human dignity, and supplemented, if necessary, by other means of social protection. 4.

Everyone has the right to form and to join trade unions for the protection of his interests.”), and

id. art. 24 (“Everyone has the right to rest and leisure, including reasonable limitation of working

hours and periodic holidays with pay.”), and id. art. 25 (“Everyone has the right to a standard of

living adequate for the health and well-being of himself and of his family, including food, clothing,

19

After World War II, the nascent United Nations adopted language that

recognized the centrality of economic security to its mission, focusing on the

objective of obtaining full employment for workers in the course of expanding

international trade. For example, the document creating the World Trade

Organization (“WTO”) listed some of its goals as:

Recognizing that their relations in the field of trade and economic

endeavour should be conducted with a view to raising standards of

living, ensuring full employment and a large and steadily growing

volume of real income and effective demand, and expanding the

production of and trade in goods and services, while allowing for the

optimal use of the world’s resources in accordance with the objective

of sustainable development, seeking both to protect and preserve the

housing and medical care and necessary social services, and the right to security in the event of

unemployment, sickness, disability, widowhood, old age or other lack of livelihood in

circumstances beyond his control.”), and id. art. 26 (“1. Everyone has the right to education.

Education shall be free, at least in the elementary and fundamental stages. Elementary education

shall be compulsory. Technical and professional education shall be made generally available and

higher education shall be equally accessible to all on the basis of merit. 2. Education shall be

directed to the full development of the human personality and to the strengthening of respect for

human rights and fundamental freedoms. . . . 3. Parents have a prior right to choose the kind of

education that shall be given to their children.), and id. art 27 (“1. Everyone has the right freely

to participate in the cultural life of the community, to enjoy the arts and to share in scientific

advancement and its benefits. 2. Everyone has the right to the protection of the moral and material

interests resulting from any scientific, literary or artistic production of which he is the author.”),

and id. art. 28 (“Everyone is entitled to a social and international order in which the rights and

freedoms set forth in this Declaration can be fully realized.”); see also Cass R. Sunstein, Economic

Security: A Human Right; Reclaiming Franklin Delano Roosevelt’s Second Bill of Rights, AM.

PROSPECT (Sept. 20, 2004), http://prospect.org/article/economic-security-human-right

(“Roosevelt’s speech has had a large international influence; the Second Bill of Rights should be

seen as a leading American export. The Universal Declaration of Human Rights, written in the

shadow of FDR and accepted by the UN General Assembly in 1948, explicitly includes social and

economic guarantees.”). FDR’s speech has also influenced key governing documents of other

nations. Cass R. Sunstein & Randy E. Barnett, Constitutive Commitments and Roosevelt’s Second

Bill of Rights: A Dialogue, 53 DRAKE L. REV. 205, 210 (2005) (detailing the influence of FDR’s

‘Second Bill of Rights’ on the constitutions of other nations, including Finland, Spain, Ukraine,

Romania, Syria, Bulgaria, Hungary, Russia, and Peru).

20

environment and to enhance the means for doing so in a manner

consistent with their respective needs and concerns at different levels

of economic development.35

In his speech famous for the phrase “Iron Curtain,” FDR’s wartime partner,

Winston Churchill, recognized the importance of economic security to sustaining a

peaceful world order, pointing to economic insecurity among working people in the

wake of the World War as reflecting the most “prevailing anxiety.”36

In the aftermath of World War II, the United States attempted without success

to embed protection for labor rights within the charter of the International Trade

Organization, which as proposed included the provision that:

The members recognize that unfair labor conditions, particularly in the

production for export, create difficulties in international trade, and

accordingly, each member shall take whatever action may be

35 Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867

U.N.T.S. 154. 36 Winston Churchill, The Sinews of Peace (Mar. 5, 1946),

https://winstonchurchill.org/resources/speeches/1946-1963-elder-statesman/the-sinews-of-

peace/. The full paragraph from which these words are derived bears citing, as it resonates of

FDR: “I have now stated the two great dangers which menace the homes of the people: War and

Tyranny. I have not yet spoken of poverty and privation which are in many cases ‘the prevailing

anxiety.’ But if the dangers of war and tyranny are removed, there is no doubt that science and

co-operation can bring in the next few years to the world, certainly in the next few decades newly

taught in the sharpening school of war, an expansion of material well-being beyond anything that

has yet occurred in human experience. Now, at this sad and breathless moment, we are plunged

in the hunger and distress which are the aftermath of our stupendous struggle; but this will pass

and may pass quickly, and there is no reason except human folly or sub-human crime which should

deny to all the nations the inauguration and enjoyment of an age of plenty. I have often used words

which I learned fifty years ago from a great Irish-American orator, a friend of mine, Mr. Bourke

Cockran. ‘There is enough for all. The earth is a generous mother; she will provide in plentiful

abundance food for all her children if they will but cultivate her soil in justice and in peace.’” Id.

21

appropriate and feasible to eliminate such conditions within its

territory.37

But that did not occur. Within the community of those who believed in

international trade, factions emerged, and what largely won out was a commitment

to expanding the world economy and providing clout behind global capital and

product providers, while providing lip service to internationalizing protections for

working people.38 Thus, the General Agreement on Tariffs and Trade (“GATT”),

and the GATT’s successor: the WTO,39 contain no protections for workers’ rights

37 Drusilla K. Brown et al., International Labor Standards and Trade: A Theoretical Analysis, in

FAIR TRADE AND HARMONIZATION: PREREQUISITES FOR FREE TRADE? 5 (Jagdish N. Bhagwaiti and

Robert E. Hudec eds., 1996). See also Robert Kuttner, How the Globalists Ceded the Field to

Donald Trump, AM. PROSPECT (Mar. 19, 2018), http://prospect.org/article/how-globalists-ceded-

field-donald-trump (“The original International Trade Organization proposed at Bretton Woods

called for a regime that would promote commerce but also defend enforceable labor standards. A

treaty creating the ITO was negotiated in 1947, but never ratified.”). 38 Kyle Bagwell & Robert W. Staiger, The Simple Economics of Labor Standards and the GATT,

in SOCIAL DIMENSIONS OF U.S. TRADE POLICIES 195, 195–96 (2000) (“GATT’s approach to labor

standards might be most aptly characterized as one of ‘benign neglect.’ . . . While there is an

explicit provision within GATT articles that allows governments to restrict importation of the

products of prison labor, the determination of domestic labor standards is for the most part

considered the legitimate domain of each national government, and weak labor standards do not

constitute a violation of GATT obligations. . . . Hence, for the most part, current GATT rules

respect the sovereignty of domestic decisions over labor standards, as they allow each member

government to determine its own labor policies without worrying about the ramifications of these

choices for either its GATT obligations or those of its trading partners. It is the wisdom of

preserving this national sovereignty over domestic labor policies while at the same time

negotiating successive multilateral agreements to liberalize world trade which is now being

challenged from various quarters in the United States and elsewhere in the industrialized world.

The primary concern voiced by labor interests and social activists is that working conditions and

wages in industrialized countries will suffer from trade liberalization as a result of increased import

competition from countries where labor standards are weak or not enforced. It is feared that such

pressures could fuel a ‘race to the bottom,’ in which the labor standards of the industrialized world

are compromised in the name of international ‘competitiveness.’”). 39 The Multilateral Trading System—Past, Present and Future, WORLD TRADE ORG.,

https://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.htm (last visited May 14,

22

other than against competition from prison labor.40 Moreover, the protections for

workers from the International Labor Organization (“ILO”) are limited to the merely

admonitory.41

The failure of the U.S. to embed worker protections in GATT was not a

pressing concern when the U.S. and EU were prospering in the post-war era. For a

period lasting until the 1970s, other Western nations and their emerging allies

enjoyed expanding prosperity and economic security, with strengthened social

2018) (“The WTO is the successor to the General Agreement on Tariffs and Trade (GATT)

established in the wake of the Second World War.”). 40 Brown et al., supra note 37 (“Since the [GATT] was conceived with a more narrow mandate in

mind, it did not address issues of labor standards, except in Article XX(e), which provides for

prohibition of goods made with prison labor.”); id. (“The United States continued to push for

negotiation of a GATT article on labor standards in both the Tokyo and Uruguay rounds of

multilateral trade negotiations. While receiving some support from other GATT member

countries, the U.S. efforts continued to be unsuccessful.”); Keith E. Maskus, Should Core Labor

Standards Be Imposed Through International Trade Policy?, WORLD BANK DEV. RESEARCH GRP.

66 (Aug. 1997), http://ctrc.sice.oas.org/geograph/labor/maskus.pdf (“[A]dvocates of strong

international labor standards favor introducing a social clause into the WTO in some form.”); id.

at 59 (“Several times during the evolution of the GATT, American trade authorities attempted to

have language on fair labor standards introduced into the agreement, each time without success.”). 41 OECD, INTERNATIONAL TRADE AND CORE LABOUR STANDARDS 4 (2000),

https://www.oecd.org/tad/1917944.pdf (“In recent years, a broad international political consensus

has emerged concerning the definition and recognition of asset of core labor standards. . . . At the

same time, there is evidence of a continuing gap between the recognition and the application of

core labour standards.”); Maskus, supra note 40, at 67 (“If the WTO is not the appropriate

international organization to address trade-related problems in labor standards, an important

question is how the ILO could be strengthened in its monitoring and reporting of violations of

[core labor standards].”); id. at 55 (“[T]he [ILO’s] conventions have no binding powers of

enforcement . . . . Indeed, the ILO had resisted the notion of international enforcement of its

conventions on grounds that doing so could severely limit ratification and push many countries

out of the organization altogether.”); id. at 57 (“The process by which the ILO operates is based

on persuasion and peer pressure. . . . National actions are monitored and governments are required

to report on labor conditions and to justify their actions with respect to working conditions. . . .

The ILO studies these complaints and its findings are publicized, so that the offending, say,

governmental restriction on bargaining rights or rights to strike becomes widely known. No other

sanctions beyond public opinion exist.”).

23

welfare states operating to address poverty, unemployment, and other economic

needs for working people.42 The middle classes grew and economic inequality was

reduced.43 To make a complex history simple, though, those halcyon days did not

42 Crain, supra note 24, at 92 (“In the three decades following the Second World War . . . [t]he real

income of Europeans rose as much as it had in the previous hundred and fifty years, and American

unemployment, which had ranged between fourteen and twenty-five percent in the thirties,

dropped to an average 4.6 percent in the fifties. The new wealth was widely shared, too; income

inequality plummeted across the developed world.”); John Gerard Ruggie, Globalization and The

Embedded Liberalism Compromise: The End of an Era? 7 (MPIfG Working Paper No. 97/1, 1997)

(“[T]he postwar international economic order rested on a grand domestic bargain: societies were

asked to embrace the change and dislocation attending international liberalization, but the state

promised to cushion those effects by means of its newly acquired domestic economic and social

policy roles. Unlike the economic nationalism of the thirties, then, the postwar international

economic order was designed to be multilateral in character. But unlike the laissez-faire liberalism

of the gold standard and free trade, its multilateralism was predicated on the interventionist

character of the modern capitalist state. Increasingly, this compromise is surpassed and enveloped

externally by forces it cannot easily grasp, and it finds itself being hollowed out from the inside

by political postures it was intended to replace.”). 43 See Jordan Weissman, 60 Years of American Economic History, Told in 1 Graph, ATLANTIC

(Aug. 23, 2012), https://www.theatlantic.com/business/archive/2012/08/60-years-of-american-

economic-history-told-in-1-graph/261503/ (“In the immediate postwar period, America’s rapid

growth favored the middle and lower classes. The poorest fifth of all households, in fact, fared

best. Then, in the 1970s, amid two oil crises and awful inflation, things ground to a halt. The

country backed off the postwar, center-left consensus—captured by Richard Nixon’s comment

that ‘we’re all Keynesians now’—and tried Reaganism instead. We cut taxes. Technology and

competition from abroad started whittling away at blue collar jobs and pay. The financial markets

took off. And so when growth returned, it favored the investment class—the top 20 percent, and

especially the top 5 percent (and, though it’s not on this chart, the top 1 percent more than anybody)

(citing PEW RESEARCH CTR., FEWER, POORER, GLOOMIER: THE LOST DECADE OF THE MIDDLE

CLASS 9 (2012), http://www.pewsocialtrends.org/files/2012/08/pew-social-trends-lost-decade-of-

the-middle-class.pdf)); HOMI KHARAS, THE UNPRECEDENTED EXPANSION OF THE GLOBAL MIDDLE

CLASS: AN UPDATE, BROOKINGS INST. 19 (2017), https://www.brookings.edu/wp-

content/uploads/2017/02/global_20170228_global-middle-class.pdf (“In the heyday of middle-

class growth in the U.S., Europe, and Japan, there was a close link between democratization and

government support for the middle class. Government policy improved urban conditions, provided

inner-city and intra-city transport, supported state-funded mass education for boys and girls,

including at tertiary levels, and provided affordable housing and other social assistance programs

such as health care and pensions. In other words, in today’s advanced economies, the middle class

developed because of public services as well as national economic growth. . . . Supporting the

middle class became an essential component of democratic governance in advanced economies.

In the U.S., New Deal programs such as the Works Progress Administration and the Social Security

24

last. A globalizing economy disrupted things. Once global competition grew

enormously starting in the 1970s, the lack of internationally enforceable protections

of this kind, meant that competitive pressures put downward pressures on social

welfare spending and the leverage of working people in general, leaving individual

nations concerned that a strong welfare state might render them vulnerable to foreign

competition from nations without similar policies and without strong protections for

workers.

Pressures to become more efficient to meet competition from nations with

lower wages and lacking the kind of social democratic protections common in the

Western nations, led in the United States to downsizings, offshoring, and a

substantial weakening of labor unions. Although the U.S. was quicker to respond in

these ways than the EU, the trends there were in the same direction. Not only that,

the post-war consensus in favor of the New Deal/Social Democratic managed

economy frayed, and support for the pre-New Deal economics of laissez-faire

grew.44

Act helped bring about an unprecedented rebound in the American middle class, adding 20 million

people between 1932 and 1937.”). 44 As scholars have pointed out, even conservative supporters of free trade fear that a pure laissez-

faire approach would erode support for opening markets. Ruggie, supra note 42, at 1–2 (“The

editors of the FT [“Financial Times”] are conscious of the fact that the extraordinary success of

postwar international economic liberalization hinged on a compact between state and society to

mediate its deleterious domestic effects—what I have elsewhere termed the embedded liberalism

compromise. They sensed that this compact is fraying throughout the western world. And they

feared that if the compact unravels altogether, so too would public support for the liberal

international economic order. In short, out of a firm commitment to free trade this stalwart of

25

Consequently, there has been a reluctance and lack of agreement to have the

recognition and enforcement of widely-shared conceptions of core labor standards45

be a condition to access to other markets under the WTO.46 Instead, many advocate

relegating workers to domestic legal protection, lest trade wars arise, concern for

workers be used as a beard for purely protectionist impulses, and developing nations’

workers suffer from an attempt to force their nations to embrace full-blown OECD-

level protections before their nations are ready.47

laissez-faire developed grave concerns about the growing inability or unwillingness of

governments to perform the domestic policy roles they were assigned under the postwar

compromise. Thus, thoughtful observers on both sides of the political aisle have begun to worry

about the relationship between globalization and domestic economic insecurity.”). 45 See, e.g., COUNCIL ON FOREIGN RELATIONS, PUBLIC OPINION ON GLOBAL ISSUES: CHAPTER 6:

WORLD OPINION ON THE GLOBAL ECONOMY 6, 34 (2011),

https://www.cfr.org/backgrounder/world-opinion-global-economy (reporting the results of a poll

of seventeen countries indicating that, on average, 81% of all respondents, 93% of respondents

from the United States, and 95% of respondents from Great Britain think that parties to

international trade agreements should be required to maintain minimum standards for working

conditions). 46 OECD, supra note 41, at 2 (“At Singapore in December 1996, WTO members renewed their

commitment to the observance of internationally recognized core labour standards,” but they also

“recognised that the ILO is the competent body to set and deal with core labour standards”);

Maskus, supra note 40, at 58 (“It is fair to say that the ILO has grave concerns about the wisdom

of writing a clause protecting minimum labor standards into the procedures of the World Trade

Organization.”). 47 See generally Drusilla K. Brown, Labor Standards: Where Do They Belong on the International

Trade Agenda?, 15 J. ECON. PERSP. 89, 91 (2001) (“Critics of labor standards point out the

unfairness of attempting to establish standards in all of these areas without regard for the level of

economic development and cultural norms.”); id. at 103 (“When countries remove tariffs and other

barriers to trade in the context of international trade negotiations, they give up the policy tools

normally used to turn the terms of trade to their advantage and to protect their import-competing

producers. These protectionist urges are thus deflected onto domestic policies such as labor

standards.”). But see DANI RODRIK, STRAIGHT TALK ON TRADE 88 (2018) (“[T]here is no reason

why workers in low income countries should be deprived of fundamental labor rights for the sake

of industrial development and export performance. These include freedom of association and

collective bargaining, reasonably safe working conditions, nondiscrimination, maximum hours,

and restrictions on arbitrary dismissal. As with democracy, these are basic requirements of a

26

As a result, Western workers faced more and more competition from

companies making products in nations where workers did not have the same kinds

of rights or protections,48 and companies had incentives to move production to places

where labor was, well, just way cheaper. At the same time, organizations like the

IMF and World Bank put intense pressure on developing nations to reduce their

social welfare states and to adopt laissez-faire economics as their policy.49

decent society. Their first-order effect is to level the bargaining relationship between employers

and employees, rather than to raise overall costs of production. And even when costs are affected,

any adverse effects could be easily offset by improved morale, better incentives, and reduced

turnover of the workforce. . . . [B]asic labor rights . . . are not an impediment to economic

development. They need not be postponed until economic takeoff takes place and is firmly

entrenched.”). 48 See generally AFL-CIO, RESPONSIBILITY OUTSOURCED: SOCIAL AUDITS, WORKPLACE

CERTIFICATION AND TWENTY YEARS OF FAILURE TO PROTECT WORKER RIGHTS 9 (2014),

https://aflcio.org/sites/default/files/2017-03/CSReport.pdf (“In the U.S. garment industry,

sweatshop labor, dangerous conditions and poverty wages were greatly reduced from the 1930s

through the 1970s mostly by holding major brands accountable for their subcontracting practices

through the innovative binding collective bargaining arrangements known as ‘jobbers agreements’

that the U.S. government and both major political parties repeatedly supported. . . . Since at least

the 1980s, major multinationals have become more globalized, building ever-longer, more flexible

and complex globalized supply chains while avoiding whenever possible the limits placed on them

by the state and unions. Since the 1990s, this only has accelerated. As manufacturing work has

left countries in which there were laws, collective bargaining and other systems in place to reduce

workplace dangers, jobs instead have gone to countries with inadequate laws, weak enforcement

and precarious employment relationships with limited workers’ voices to defend day-to-day

worker interests or raise the alarm before disaster strikes. The improvements made in an earlier

era in industrialized countries were achieved by unions, collective bargaining and state regulation.

Yet workers, the supposed beneficiaries of these current CSR programs, rarely have much of a role

in the CSR monitoring and certification system as it currently exists.”). 49 See Steven A. Ramirez, Market Fundamentalism’s New Fiasco: Globalization as Exhibit in the

Case for a New Law and Economics, 24 MICH. J. INT’L L. 831, 846 (2003) (observing that

developing nations “have little choice but to follow the free market dictates of the IMF,” and that

“international economic institutions” like the IMF and the World Bank “were never intended to be

the high priests of the failed laissez-faire ideology.”); Crain, supra note 24, at 93 (“Starting in the

eighties, developing nations found free-market doctrine written into their loan agreements: bankers

refused to extend credit unless the nations promised to lift capital controls, balance their budgets,

limit taxes and social spending, and aim to sell more goods abroad—an uncanny replica of the

27

Caught in this cross fire were parties of the center left, who wished to be open

to trade, but whose working class members were among those most affected by the

economic dislocations of globalization. Although the net benefits of globalization

were real, so too were the negative effects for working people and the middle class.50

austerity terms enforced under the gold standard. The set of policies became known as the

Washington Consensus.”). 50 See, e.g., RODRIK, supra note 47, at 126 (noting that “expanded trade has interacted with the

macroeconomy to produce . . . negative consequences for wages and unemployment”); David

Autor et al., The China Shock: Learning from Labor-Market Adjustment to Large Changes in

Trade, 8 ANN. REV. ECON. 205, 206 (“Of course, introductory trade theory also teaches us that

international trade is not generally Pareto improving. . . . ‘[I]nterrnational trade tends to make

low-skilled workers in the United States worse off—not just temporarily, but on a sustained

basis.’”) (quoting PAUL R. KRUGMAN & MAURICE OBSTFELD, INTERNATIONAL ECONOMICS:

THEORY AND POLICY 64 (2008)); Jeronim Capaldo & Alex Izurieta, Trading Down:

Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement 19 (Tufts

Univ. Global Dev. and Env’t Inst., Working Paper No. 16-01, 2016),

http://www.ase.tufts.edu/gdae/Pubs/wp/16-01Capaldo-IzurietaTPP.pdf (finding that the TPP will

lead to “a contraction of GDP in the United States and in Japan, and negligible income gains in

other countries” and “job losses and higher inequality in all participating economies,” and that “the

costs of the TPP are projected to fall asymmetrically on labor”). Even conservative voices

supportive of more open trade recognize this problem. See generally The New Political Divide,

THE ECONOMIST (July 30, 2016), https://www.economist.com/news/leaders/21702750-farewell-

left-versus-right-contest-matters-now-open-against-closed-new (“Those who believe in

[globalization] must . . . acknowledge, however, where globalisation needs work. Trade creates

many losers, and rapid immigration can disrupt communities. But the best way to address these

problems is not to throw up barriers. It is to devise bold policies that preserve the benefits of

openness while alleviating its side-effects. Let goods and investment flow freely, but strengthen

the social safety-net to offer support and new opportunities for those whose jobs are destroyed. To

manage immigration flows better, invest in public infrastructure, ensure that immigrants work and

allow for rules that limit surges of people (just as global trade rules allow countries to limit surges

in imports). But don’t equate managing globalisation with abandoning it.”); Paul Krugman, Trade

and Inequality, Revisited, VOX (June 15, 2007), https://voxeu.org/article/trade-and-inequality-

revisited (“In 1995, I believed that the effects of trade on inequality would eventually hit a limit,

because at a certain point advanced economies would run out of labour-intensive industries to

lose—more formally, that we’d reach a point of complete specialisation, beyond which further

growth in grade would have no further effects on wages. What has happened instead is that the

limit keeps being pushed out, as trade creates ‘new’ labour-intensive industries through the

fragmentation of production. . . . This doesn’t mean that I’m endorsing protectionism. It does

mean that free-traders need better answers to the anxieties of those who are likely to end up on the

losing side from globalization.”); see also Crain, supra note 24, at 93 (“[A]lthough free trade

28

So, when what has been called the Great Recession hit, it is unsurprising that

some of the same nativist sentiments that arose in the 1930s emerged in both the

U.S. and EU.51 Inequality had risen in the U.S. to levels not seen since the mid-

1920s and even surpassed those levels52 and the recovery from the Great Recession

benefits a country over all, it almost always benefits some citizens more than—and even at the

expense of—others. The proportion of low-skilled labor in America is smaller than most countries

that trade with America; economic theory therefore predicts that international trade will, on

aggregate, make low-skilled workers in the United States worse off.”). 51 Edward D. Mansfield et al., Effects of the Great Recession on American Attitudes Toward Trade,

BRIT. J. POL. SCI. 1, 1 (2016), http://iscap.upenn.edu/sites/default/files/effects_of_the_

great_recession_on_american_attitudes_toward_trade%20%281%29.pdf (finding that, during the

Great Recession, Americans “working in import-competing industries who lost their jobs” grew

more hostile to trade and that, “most importantly,” increasing anxiety that foreign commerce would

harm people in the future, even if it had not done so thus far, contributed to mounting opposition

to trade in the American public”); Yann Algan et al., The European Trust Crisis and the Rise of

Populism 1 (Eur. Bank for Reconstruction and Dev., Working Paper No. 208, 2018),

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3128274 (showing a post-Great Recession

rise in populist parties that “share a criticism of European supranational integration and a call for

a return to supremacy of nationalism”); see generally Crain, supra note 24, at 92 (discussing how

no populist leader—“defined as a politician who is anti-elite, authoritarian, and nativist—took

office during th[e] golden era [during the three decades following the Second World War], and

that a far narrower share of votes went to extremist parties than before or after”) (citing BARRY

EICHENGREEN, THE POPULIST TEMPTATION (2018)) (internal quotations omitted); Robert Kuttner,

supra note 37 (“For three decades [following Bretton Woods in 1944], the West combined high

rates of growth with increasing equality and security for ordinary citizens. But a major shift in

both power and dominant ideology has turned the global marketplace back into something more

like the pre-Roosevelt system. ‘Trade’ deals have been deployed to dismantle managed capitalism.

Working people have not only suffered; they have lost confidence in globalist elites—and worse,

in government itself and even in democracy. This is a system-wide pathology. That’s why the

backlash, and the embrace of ultra-nationalist strongmen, looks so similar throughout the West.

The more that bien pensants double down on globalization, the more defections they invite and

the more leaders like Trump we get.”). 52 Erik R. Stegman, Introduction and Summary, in RESETTING THE POVERTY DEBATE: RENEWING

OUR COMMITMENT TO SHARED PROSPERITY 4 (2013), https://www.americanprogressaction.org/

wpcontent/uploads/2013/10/HalfInTen_2013_CAP1.pdf (“Most importantly, income inequality is

at its highest level since the 1920s, and it has been getting worse even as our economy grows after

the Great Recession. This is a far cry from the era of broadly shared growth and prosperity in the

decades immediately after World War II.” (citing Chad Stone et al., A Guide to Statistics on

Historical Trends in Income Inequality, CTR. ON BUDGET & POLICY PRIORITIES (2013),

http://www.cbpp.org/cms/?fa=view&id=3629)); see also SHELDON DANZIGER ET AL., POVERTY

29

did not reduce that growing tendency. Instead, it deepened, as the benefits of a

globalizing economy flowed more and more to an elite few.53 Economic insecurity

AND THE GREAT RECESSION 5 (2012), https://web.stanford.edu/group/recessiontrends-

dev/cgibin/web/sites/all/themes/barron/pdf/ Poverty_fact_sheet.pdf (“The last time poverty was as

high as it is now was in the early 1980s.”); Mark Sheskin, The Inequality Delusion, THE NEW

SCIENTIST, Mar. 31, 2018, at 28 (“Take the wealth of the eight richest people on the planet and

combine it. Now do the same for the poorest 3.5 billion. The sums are the same: $350 billion.

Correct: just eight people own as much wealth as half of the world’s population.”); David Cole,

Taxing the Poor, N.Y. REV. (May 10, 2018), at 25 (“The New Deal . . . introduced price controls,

wage and workday regulations, and other protections of workers and consumers from exploitation

by big business. In part because of these reforms, America after World War II entered a period in

which prosperity was shared fairly widely, and the middle class grew. In 1928, for example the

top 10 percent of earners took home 46 percent of the nation’s income, not including capital gains.

From 1951 to 1982, however, the top 10 percent’s share never hit 33 percent. Government

subsidies supported home buying for all and college education for millions of veterans. The

poverty rate dropped markedly, reaching a low of 11 percent in 1973. Following a major

agreement in 1950 between auto workers and General Motors, businesses began providing

pensions and health insurance for their employees. And the income tax during this period was

truly progressive: the top marginal tax rate was 88 percent in 1942, 91 percent from 1951 to 1963,

and remained above 70 percent until 1981. Under Trump’s tax cut, by contrast, the top rate will

drop to 37 percent. Since the late 1970’s, income and wealth disparities have once again grown

dramatically. In 2017, the richest 10 percent of Americans owned 77 percent of the nation’s

wealth, a higher proportion even than in the Gilded Age. Today, the twenty richest Americans

have more wealth between them than the bottom half of the US population—some 152 million

people. In 1979, CEO’s of America’s most successful businesses earned, on average, about thirty

times as much as their workers. By 2013, they earned almost three hundred times as much. And

in the thirty-year period from 1979 to 2008, the top 10 percent of Americans received 100 percent

of the benefits from growth in income, while the incomes of the bottom 90 percent fell.”); Christina

M. Gibson-Davis & Christine Percheski, Children and the Elderly: Wealth Inequality Among

America’s Dependents, 55 DEMOGRAPHY 1009, 1011 (2018) (“Wealth inequity has risen

tremendously in the United States over the past half-century. In 1962, the top 20% of the wealth

distribution accounted for 81% of all wealth; by 2013, that share had risen to 89%. Wealth

inequality was relatively flat between the 1960s and early 1980s, rose steeply in the 1980s,

plateaued in the 1990s and early to mid-2000s, and then increased sharply with the onset of the

Great Recession. Increases in wealth inequality appear to be driven by those at the very top of the

wealth distribution (the so-called 1%). Between 1983 and 2013, the top 1% had net worth gains

of 40%, while those in the bottom 80% had decreases of -0.01%.”) (citations omitted). 53 Timothy Meyer, Saving the Political Consensus in Favor of Free Trade, 70 VAND. L. REV. 985,

988–89 (2017) (“Ninety-five percent of the economic gains during the recovery from the financial

crisis of 2007 have gone to the richest one percent of society.”); JESSE BRICKER ET AL., CHANGES

IN U.S. FAMILY FINANCES FROM 2010 TO 2013: EVIDENCE FROM THE SURVEY OF CONSUMER

FINANCES 7‒8, https://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf (“By percentile

of net worth . . . , both mean and median income fell [between 2010 and 2013] for those in the

30

increased as more and more people feared that they and their children would be

unable to match the lifestyles led by their parents. Stagnation and even decline in

real wages over a quarter century gave an empirical basis to this concern. So did the

ever growing gap between the wealthy elites and the rest of society.

The emergence of parties like the UK Independence Party (“UKIP”) in the

U.K. clamoring for Brexit, and the successful candidacy of Donald Trump in 2016

were long in coming. Learned commentators had argued for many years that failing

to address the economic anxiety being produced by globalizing trade without

globalizing protections for workers would lead to bad results.54

And poll data from the U.S. and the EU demonstrate that economic insecurity

was central to the appeal of movements like Brexit and to the election of Donald

Trump.55 When economic insecurity was profound, arguments that it was the

bottom three quartiles, while both measures rose for the top quartile.”); Andrew J. Bacevich,

Saving “America First”: What Responsible Nationalism Looks Like, FOREIGN AFF., Sept.–Oct.

2017, at 62 (“True, since the end of the Cold War, globalization has created enormous wealth. But

it has also exacerbated inequality.”). 54 A good example is reflected in a scholar’s description of Labor Secretary Reich’s still relevant

thoughts of over a decade ago. Ruggie, supra note 42, at 1 (“Outgoing United States Labor

Secretary Robert Reich, in a January 1997 address, maintained that the second Clinton

administration’s ‘unfinished agenda is to address widening inequality’” in America. Indeed, he

questioned whether the United States was abandoning ‘the implicit social contract’ it had

maintained with workers for half a century. Technological advances and global economic

integration, he noted, ‘tend to reward the best-educated and penalize those with the poorest

education and skills,’ and government policy had not yet effectively responded to the new

economic realities.”). 55 See Heather Stewart, UK Politics Becoming Mired in ‘Culture Wars,’ Study Suggests, THE

GUARDIAN (Dec. 7, 2016), https://www.theguardian.com/politics/2016/dec/07/study-finds-uk-

politics-mired-culture-wars-brexit-donald-trump (“60% of people who said the[y] were ‘just

getting by’ [financially] voted to leave the EU, as did 70% of those who said they were ‘finding it

31

“other,” the foreign worker, global elites, and so forth had fertile ground in which to

flower, and flower they did.56

quite or very difficult”); Robert Griffin & Ruy Teixeira, THE STORY OF TRUMP’S APPEAL: A

PORTRAIT OF TRUMP VOTERS 8 (2017) (“Among general election voters, Trump supporters were

twice as likely as Clinton supporters to have said their personal finances were getting worse (52 to

26 percent) and four times as likely to have said the economy was getting worse (59 to 15 percent).

And on both of these questions, 40 percent of Obama to Trump switchers thought things were

getting worse.”); see also Autor et al., supra note 50, at 225 (arguing that the adverse effects of

international competition to American workers varies by region, and suggesting that the

Midwestern states on which the 2016 election turned were among those most negatively affected

by trade with China between 1990 and 2007). As of this year, at a time of low unemployment, but

not fast-growing wages, the economic anxiety of Americans in battleground states still exceeds

their optimism on almost every dimension. See Stanley Greenberg, The Broad Support for Taxing

the Wealthy, AM. PROSPECT (June 20, 2018), http://prospect.org/article/broad-support-taxing-

wealthy (citing April 2018 polling data to this effect). 56 I understand that there are those who agree that a desire to preserve a certain sense of culture,

not economic insecurity, is driving national sentiment and support for anti-immigration and anti-

international sentiment. See, e.g., Matthew Wright et al., Conflict and Consensus on American

Public Opinion on Illegal Immigration 7 (Am. Univ. Sch. of Pub. Aff. Research Paper No. 2014-

0006, 2014) (“Perceived threats to a country’s distinctive identity and culture drive immigrant

sentiment in the U.S. and elsewhere.”); Dara Lind, The Research That Made Me Take Donald

Trump Seriously, VOX (May 4, 2016), https://www.vox.com/2015/7/29/9060427/nativism-

research-immigration-trump (“For many white Americans—the Republican Party’s most

important constituency, in both the primaries and the general election—immigration isn’t as simple

as legal versus illegal. Their primary concern is preserving American culture.”). But, it seems to

me that there is a strong relationship between economic and cultural insecurity. If working and

middle class people felt secure that they and their children would make a good living, the threat

they perceive from outsiders would be minimized. In fact, there is data that shows that cultural,

national sentiment is high in areas with low immigrant populations but high economic insecurity;

PEW RESEARCH CTR., MODERN IMMIGRATION WAVE BRINGS 59 MILLION TO U.S., DRIVING

POPULATION GROWTH AND CHANGE THROUGH 2065: VIEW OF IMMIGRATION’S IMPACT ON U.S.

SOCIETY MIXED 54 (2015), http://www.pewhispanic.org/files/2015/09/2015-09-28_modern-

immigration-wave_report.pdf (“U.S.-born adults who live in places with immigrant communities

feel more positively about immigrants. About half (45%) of this group say immigrants make

American society better in the long run, compared with 33% of those who say there are no

immigrants living in their community.”); id. at 53 (finding that 46% of respondents to the survey

with no post-high school education believe that immigrants to the U.S. are making American

society worse, as compared to the 64% of respondents with bachelor’s degrees or more who believe

that immigrants are making American society better); Bradley Jones, Support for Free Trade

Agreements Rebounds Modestly, But Wide Partisan Differences Remain, PEW RESEARCH CTR.

(Apr. 25, 2017), http://www.pewresearch.org/fact-tank/2017/04/25/support-for-free-trade-

agreements-rebounds-modestly-but-wide-partisan-differences-remain/ (“[O]pinions about the

effects of free trade agreements on the country and the effects of trade on people’s personal

32

And because the center left parties had no robust answer to addressing this

insecurity, their natural base—working people—were tempted to break away,

particularly when they found themselves less able to identify with the Davos

Democrats arguing that everyone should just assume that a globalizing economy was

a good thing.57 The concerns of that crowd, however high minded, seemed to be

rather high class problems compared to formerly middle class families facing

downward decline and hearing no promise of how their lives would be better than,

or even as good, as the lives their parents had led.

All of this would have seemed to Berle to be natural. To ignore the centrality

of economic security to a stable domestic society and world order was to disregard

everything Berle knew to be most important.

finances are linked: 70% of those who say free trade agreements are good for the country also say

they have been helped financially by such agreements and a similar share (74%) of those who say

these agreements are a bad thing say they have been hurt.”); EUR. COMM’N, SPECIAL

EUROBAROMETER 461 REPORT 26 (2017), http://ec.europa.eu/commfrontoffice/publicopinion

/index.cfm/Survey/getSurveyDetail/instruments/SPECIAL/surveyKy/2173 (“The more

difficulties a respondent has in paying household bills, the less likely they are to say globalization

is positive: 39% of those with the most difficulties say this. Compared to 57% with the least

difficulties.”); see also Marco Becht and Luis Correia da Silva, EXTERNAL FINANCIAL MARKETS

POLICY: EUROPE AS A GLOBAL REGULATOR?, in FRAGMENTED POWER: EUROPE IN THE GLOBAL

ECONOMY 200, 229, 248, 252 (Andre Sapir ed., 2007) (citing reasons why immigration of low-

skilled, low-cost workers can hurt low-skilled and blue collar workers of the host country, in terms

of unemployment and downward pressure on wages). 57 Kuttner, supra note 37 (“Elites of both parties won the policy debates on trade, but lost the

people. By 2016, millions of working people whose families had once reliably supported

Democrats had defected to the Tea Party and then to Trump. Across the Atlantic, their counterparts

were deserting social democrats to support far-right nationalist parties. Conflicts over refugees

and over identity compounded the backlash, but it was basically economic.”).

33

III.

The next topic of current relevance involves whether government has the duty

and capacity to act to make sure that the economy provides economic security for

the many. This is an easy topic to cover as it relates to Berle.

With the stagnation of wages in the U.S. and EU for working people and

growing inequality, and the absence of any indication that the admonitions of the

ILO or other international bodies has sufficed to protect the clout of workers, one

imagines that Berle would be impatient without moving beyond the current impasse

to the recognition of a reality that he had already accepted in his lifetime: ultimately,

government regulation of the economy to make sure it serves all fairly must be co-

extensive with the scope of that economy. The argument that workers’ rights should

be subordinate to those of mobilized capital and that a world economy should be

premised on giving a huge club to capital, and kind, non-binding words to labor

involves a belief that the world should return to its pre-New Deal state.

Consistent throughout Berle’s writings from the 1930s onward was an

unwavering belief that addressing the legitimate desire of working people to have

stable work, a roof over their head, health care, and a secure retirement was

fundamental to a just society.58 Berle went even further and argued that after the

New Deal and the investments society had made in increasing private sector

58 See, e.g., The Quest for Individual Security, supra note 6, at 406.

34

profitability, the stockholders of corporations could not claim to be any more entitled

to hog those profits than society generally. In fact, in an early article in The New

Republic, Berle argued for moving toward a system of production in which most of

the gains went to managers and workers, with passive stockholders limited to

35

receiving a limited return.59 The division of income between labor and capital that

Berle cared about remains a huge issue in today’s economy.60

59 Adolf A. Berle, Jr., How Labor Could Control, NEW REPUBLIC, Sept. 7, 1921. He explained his

thinking this way:

Where [stockholders] actually do manage, throwing in brains and judgment and

skill with their money they render a service entitling them to more than simple

interest on their money. As a matter of plain fact however [stockholders] usually

do not manage; they sign a proxy which comes around once a year in the mail. A

small group do manage and earn much of what they receive; but the larger

proportion merely buy, hope, hold and cash in when they can, reaping where they

did not sow. The use of their money is worth the current rate of interest; the value

of their management is nil. Everything over interest is unearned increment—which

is merely another way of saying earned by someone else; someone who did not get

all he earned—or, to speak plainly, by the men who worked in the corporation’s

mills or mines.

Just here it becomes possible to think of a businesslike end to the economic war.

Who are the people who have a right to capitalize the hope of the plant’s earnings?

Who are the people who can decently gamble on their output? Who are the people

who have most right to ask for control of the plant? The answer is obviously in

favor of the staff of the plant, including, of course, the chairman of the board, the

directors, as well as the oilers and feeders and loomfixers. That the large minority

of employees should have to spend their spare time devising means to fight the

control of their own plant is simple foolishness.

Id. The rest of the article argues in essence for concentrating most of the effective economic

ownership and control of corporations in their managers and workers on a cooperative basis. Id.

The excellent article by Professor Hendrickson in this symposium underscores several of these

points. Mark Henderson, “In time of stress, a civilization pauses to take stock of itself:” Adolf A.

Berle and the Modern Corporation from the New Era to the New Deal, SEATTLE U. L. REV.

(forthcoming 2018) (stressing Berle’s focus on ensuring that the workers of corporations were

fairly treated as the separation between stock ownership and control widened, noting Berle’s

proposal to create a company controlled by its workers and managers, highlighting Berle’s view

that it was critical that government act to make sure the economy worked for the many, and saying

that Berle’s later more sanguine view of corporations and the growth of institutional investors was

rooted in his belief that they had been regulated such that although the economic system was not

socialized in terms of ownership, it had acted to “socialize income” and to provide a good living

for the many). Berle’s thinking is echoed in current examples such as the German system of co-

determination, where labor influence on both boards and workers’ councils exemplifies many of

the concerns voiced by Berle. See, e.g., Mark J. Roe, Some Differences in Corporate Structure in

Germany, Japan, and the United States, 102 YALE L.J. 1927, 1970 (1993) (arguing that co-

determination “injects employees—white collar, blue collar, and union-represented—into the

36

Without the investments and policies of the polity, private industry would not,

in Berle’s view, be anywhere as wealthy and profitable as it was,61 and therefore it

was fitting that the private sector act responsibly to make the economy work for the

many.62 As he wrote in 1965:

Corporations derive their profits partly indeed from their own

operations, but partly also from their market position and increasingly

from techniques resulting from state expenditures of taxpayers’ money.

In this sense, the American state is an investor in practically every

substantial enterprise; without its activity, the enterprise, if it could

exist at all, would be or would have been compelled to spend money

boardrooms of the largest German firms,” and that “[w]hile American politics fragmented capital

and labor, German politics brought them together in the boardroom”). 60 A thorough study prepared by the International Labour Organization for the G20 Employment

Working Group in 2015 documented: i) the decline in the comparative share of national wealth

going to workers in the G20 nations during the period from 1970 to 2014; ii) a corresponding

increase in overall economic inequality; and iii) the fact that both of these factors are present in

the United States and that workers’ share of the national wealth in the United States is at a level

lower than that reached in the 1930s. INTERNATIONAL LABOUR ORGANIZATION, THE LABOUR

SHARE IN G20 ECONOMIES 6, 7, 11 (2015). See also Jeff Stein, Federal Reserve Chair: Decline in

Worker Share of National Economy ‘Very Troubling’, WASH. POST, July 17, 2018,

https://www.washingtonpost.com/business/2018/07/17/federal-reserve-chair-decline-worker-

share-profits-very-troubling/?noredirect=on&utm_term=.7c48110964a6 (reporting that Federal

Reserve Chair Jerome Powell testified before the Senate Banking Committee that “the share of the

national income going to American labor had fallen ‘precipitously’ for more than a decade and

was not reversing course” and that “‘[i]n the last five years or so, labor share of profits has been

sideways . . . very much akin to the flattening out of median incomes over the last few decades’”). 61 See Adolf A. Berle, Jr., The Government in Business, 1 VITAL SPEECHES OF THE DAY 839, 839‒

40 (1935) (arguing that “[m]ost business in the country got its start with government assistance,”

that those who argue that government should stop regulating business are the most likely to have

benefited from special legislation, that many lines of business are more public than private, and

that a “government which is not concerned with business simply cannot survive”). 62 Berle had little time for the post-war advocates of laissez-faire, even those from the “Chicago

school,” who he viewed as ignoring history and as taking credit for successes that were in fact due

to the New Deal/Social Democratic modification to capitalism. Adolf A. Berle, Modern Functions

of the Corporate System, 62 COLUM. L. REV. 433, 433‒37 (1962); see also id. at 442‒44

(disagreeing with strong advocates of stockholder profit maximization like Professor Henry G.

Manne and arguing that competitors are entitled to engage in socially responsible pursuit of profit

that involves fair treatment of their workers and public-regarding behavior).

37

and effort to create position, maintain access to market, and build

technical development it currently takes for granted. Under these

circumstances, there is little reason or justification for assuming that all

profits should automatically accrue to stockholders. Put differently,

stockholders—not having created the entire enterprise—are no longer

the sole residuary legatees (after production costs and depreciation) of

all the profits of an industrial progress, much of which is derived from

state outlay.63

In the final chapter of his iconic book with Means, Berle argued that, like other

forms of power over society, those who wielded economic power must be

accountable for exercising it in a way that was fair to all.64 He argued that the

separation of ownership and control counseled for the adoption of a “wholly new

concept of corporate activity,” in which:

[n]either the claims of ownership [i.e., stockholders’] nor those of

control [i.e., corporate managers’] can stand against the paramount

interests of the community. The present claims of both contending

parties now in the field have been weakened by the developments

described in this book. It remains only for the claims of the community

to be put forward with clarity and force. Rigid enforcement of property

rights as a temporary protection against plundering by control would

not stand in the way of the modification of these rights in the interest of

other groups. When a convincing system of community obligations is

worked out and is generally accepted, in that moment the passive

property right of today must yield before the larger interests of society.

63 Property, Production and Revolution, supra note 8, at 9; see also Government Function, supra

note 6, at 37 (“It should be possible, if sufficient care be taken in constructing institutions, to make

possible that direct intervention in economic activity which may be required at any given time to

stabilize and improve economic conditions, without thereby impairing anyone’s liberty of choice.

Perhaps it is not too much even to hope that enlightened private enterprise will be drawn to see

that this sort of activity is as vital to their economic life as it is to the political life of the state. It

is, in fact, the only possible insurance against the cataclysmic movements which have eliminated

liberty and individual enterprise alike on the Continent of Europe.”). 64 ADOLF A. BERLE, JR. & GARDINER C. MEANS, THE MODERN CORPORATION AND PRIVATE

PROPERTY 356 (1932).

38

Should the corporate leaders, for example, set forth a program

comprising fair wages, security to employees, reasonable service to

their public, and stabilization of business, all of which would divert a

portion of the profits from the owners of passive property, and should

the community generally accept such a scheme as a logical and human

solution of industrial difficulties, the interests of passive property

owners would have to give way. Courts would almost of necessity be

forced to recognize the result, justifying it by whatever of the many

legal theories they might choose. It is conceivable,—indeed it seems

almost essential if the corporate system is to survive,—that the

“control” of the great corporations should develop into a purely neutral

technocracy, balancing a variety of claims by various groups in the

community and assigning to each a portion of the income stream on the

basis of public policy rather than private cupidity.65

Berle was a believer in economic progress and scientific advancement, but

knew that both could be disruptive to businesses and workers threatened by them.

And he thought it was a just society’s duty to help them, something he spoke about

in 1943 when he said the function of an enlightened government managing a modern

economy:

First: That every government, and particularly every democratic

government, will be under an impulsion to attempt to provide for the

economic needs of substantially all its people;

Second: That the method will be an attempt to assure substantially

general opportunity for useful work at adequate pay, accompanied by

social security provision for the nonproductive periods of life, including

childhood, maternity, sickness, and old age;

Third: That whenever any substantial gap appears in the generality of

the provision achieved, government will be under pressure to fill that

gap through direct entry into economic activity heretofore commonly

carried on by nongovernmental agencies;

65 Id.

39

Fourth: That economic readjustments in large countries may be

presumed to create problems of such magnitude that purely private

activity cannot provide for them.66

For a society like the United States committed to individual liberty, including

the ability to engage in commerce for personal gain, he argued that: “A free and

democratic government will seek full employment, but only under conditions which

give the maximum possible choice of life to the individuals composing its state; and

its direct entry into the economic field will always be restrained by this

consideration.”67 Thus, in addressing the dislocations produced by economic

dynamism, such as the increased ability of machines to produce more with less labor,

Berle argued that for that reason:

“[F]ree governments, as they have obeyed the impulsion to enter the

economic field and to provide full employment and activity for their

people, have sought, in order:

1. Methods by which the individual was assisted to

enter new fields of production: for instance, the land grant

policy followed after the American Revolution, and in

economic crises during the nineteenth century.

2. Indirect encouragements to provide enterprise in the

hope that this stimulation would provide the necessary

activity and employment: tariffs, indirect subsidies,

temporary monopoly, such as patent rights, and the like.

This intervention, forecast in Hamilton’s report on

manufactures, was the norm during the latter part of the

nineteenth century and through to 1930.

66 Government Function, supra note 6, at 27. 67 Id. at 32.

40

3. Direct intervention in the economic field, but

oriented toward private individual and enterprise, and

carried out through direct financial assistance. This was

the policy to which President Hoover’s government was

eventually driven when the Reconstruction Finance

Corporation was formed, when the Federal Reserve banks

were empowered to make direct loans to industry, and

when a program of railroad aid was commenced.

4. Direct entry into economic fields, limited, however,

strictly to nonprofit or nonprivate operations, such as

conventional public works (roads, bridges, public

buildings, and so forth), with which must also be bracketed

low rent, public-assisted housing, and certain other similar

operations in fields which for one reason or another private

activity was unable or unwilling to occupy.

5. Direct intervention in direct production in certain

fields in which government is able to work, but in which

private enterprise is also able to work, for the purpose,

largely, of assuring that the work shall be done and the

production made available at times and under

circumstances in which for one reason or another (perhaps

temporary), private activity is unable or unwilling to

advance.”68

Berle was also bullish on our ability to generate more abundant wealth and to

have it shared more widely.69 He advocated that the wealth being amassed be

68 Id. at 32–33. 69 See Welfare of the Masses, supra note 6, at 469 (arguing that tax systems should “assure that

economic growth does not merely make the rich richer” and that ownership of industry “be spread

as widely as possible”); Adolf A. Berle, Jr., The Law and the Social Revolution, 22 SURVEY

GRAPHIC 592, 593 (1933) [hereinafter The Law and the Social Revolution] (“A question has been

asked, and that question has not been answered. The question is, why, in a civilization over-full

of material things, more than able to supply every human need, the organization of economics

leaves millions upon millions of people in squalor and misery? Since it seems that private interests

cannot, or, at all events, do not, solve this problem by achieving a balance, the insistence is that

41

deployed to fund the infrastructure and social and cultural institutions necessary to

a modern economy,70 and he argued that it was not coincidental that wealthier

communities tended to be the ones where investments in these areas had been

made.71 Thus, in an article in 1960, he called for a focus on the revitalization of

major urban areas and contended that the wealth that was being placed in pension

and mutual funds could be well deployed to fund that worthy project.72 And to this

point, in 1964, Berle argued that the “American economic system now permits, and

the state erect a form of law so changing the machinery of production and distribution that human

needs throughout the country will be approximately satisfied.”). 70 Reflections on Financing Governmental Functions of the Metropolis, supra note 8, at 78 (“We

are beginning to learn that a modern economy cannot continue running at the rate of productivity

and speed needed to keep it above water unless a substantial margin is devoted to ends which we

call ‘altruistic’—over and above calculation sof personal profit or advantage. . . . The corollary of

this, however, is that these altruistic activities—now seen not to be a net cost but a net support and

accretion—have to do with the economy of the entire United States. Like the keystone of an arch,

they both hold and are held. They take in and they feed out, and their line has gone out to the

entire country. ‘Federal aid’ is not a local enterprise; properly handled in the great metropolitan

areas, it is a solid support for a large part of the American economy.”); see also Private Property,

supra note 6. 71 Reflections on Financing Governmental Functions of the Metropolis, supra note 8, at 78 (“The

great metropolitan areas offer golden opportunities for just this kind of activity—indeed their

organization almost compels such economics. It is not accident that the communities which have

existed or exist alongside of great altruistic neighbors such as great universities, great museums,

or great churches are commonly far more prosperous than those which do not.”). 72 Id. at 77–78 (“We are beginning to learn that a modern economy cannot continue running at the

rate of productivity and speed needed to keep it above water unless a substantial margin is devoted

to ends which we call “altruistic”—over and above calculations of personal profit or advantage.”);

see also And What Shall We Do Then?, supra note 8, at 122 (arguing for the use of public works

and urban reconstruction as a critical part of reorienting the war economy to promote peaceful

prosperity).

42

social morality demands, a new huge advance of comparable proportion” to the New

Deal but involving an even “larger vision[] of the content of life.”73

IV.

It is equally easy to show that Berle would reject exiting from international

engagement as an answer to economic insecurity arising from commercial

dynamism in a globalizing economy.74 Berle viewed the turtle approach to security

as outdated six decades ago. In 1954, he wrote:

A comparatively small country with determination, will, and a devoted

population handling its economic life without too much reference to the

neighboring areas could, two centuries ago, put enough force into the

field to stand off even the more powerful neighbors, and could maintain

a cultural life satisfying its people and often contributing brilliantly to

the world. But mid-twentieth-century scientific progress has shredded

the former situation into its component parts.75

73 Adolf A. Berle, Jr., Book Review, NEW REPUBLIC, Mar. 7, 1964, at 24, reviewing STERNSHER,

REXFORD TUGWELL AND THE NEW DEAL (1964). 74 E.g., Adolf A. Berle, Jr., Other Forces Which Determine Our Foreign Policy, 1 VITAL SPEECHES

OF THE DAY 415 (1935) [hereinafter Other Forces Which Determine Our Foreign Policy]

(“Manufactured goods and agricultural products have for some centuries flowed fairly freely

throughout the world. It became absolutely necessary for them to do so when the western

European countries, such as Italy, Germany and Great Britain, developed populations larger than

could be supported with the agricultural products of their own land. They had to buy raw materials;

they had to manufacture; they had to sell abroad; and they had to import food. Cut that chain and

you get a slow process of starvation. In point of fact, there is not a great deal of difference between

a tremendously high tariff war cutting England off from her export trade and a submarine campaign

torpedoing food-ships as they come in. The latter is more dramatic and a little swifter, but the

effect is much the same.”); Adolf A. Berle, Jr., Cooperative Peace in the Western Hemisphere, 1

DEPT. OF STATE BULLETIN 659, 663 (1939) (arguing for the importance of mutually advantageous

trade agreements among nations in the Americas not just for the good of business, but also for the

“promise of economic stability” in all the participating nations). 75 The Soviet-Chinese Complex, supra note 11, at 67.

43

Even during this period of American hegemony, he believed that the United

States itself would suffer if it tried to disengage from the world economy, noting:

Modern economics, as noted, make it practically impossible for any

state, even the largest, to exist at a tolerable economic level except as

part of a complex of many other countries. Were the United States, for

example, cut off from all foreign commerce, the economy of America

would drop in six months’ time to a level few of us would tolerate; and

in the process at least a dozen other countries would be reduced to

collapse. Were smaller countries, say Great Britain or Germany (let

alone the Netherlands), thus circumscribed, their peoples would

approach starvation.76

Given that the extent of international trade has grown enormously since that

time,77 and that the U.S. economy is now heavily dependent on international trade,78

it is hard to imagine that Berle would now disclaim his prior belief that:

76 Basic Elements, supra note 10,at 426; see also id. (“Economically, few countries, if any, are

now sovereign save in name.”). 77 See generally WORLD TRADE ORG., WORLD TRADE REPORT 2017: TRADE, TECHNOLOGY AND

JOBS 16–18 (2017), https://www.wto.org/english/res_e/booksp_e/world_trade_report17_e.pdf

(“[T]he international economic system established after the Second World War was purposely

designed around the interlinked objectives of open trade and integration, on the one hand, and full

employment, social security, and mass public education, on the other . . . . Indeed, the evolution

of the global economy over the past century, especially since 1945, has generally been

accompanied not by a retreat of government but by its advance at the national and international

level, providing the institutions, rules, regulations and social safety nets that are increasingly

indispensable—along with less formal social and cultural institutions and networks—for the

functioning of sophisticated and complex market economies.”). 78 See generally BUS. ROUNDTABLE, HOW THE U.S. ECONOMY BENEFITS FROM INTERNATIONAL

TRADE & INVESTMENT 1, http://businessroundtable.org/sites/default/files/BRT_TRADE_

2015_US.pdf (explaining that international trade supports 41 million U.S. jobs; that the U.S.

exported $1.6 trillion in goods and $710.6 billion in services in 2014; and that free trade

agreements facilitate rapid export growth from the U.S.); CHRISTOPHER WILSON, HOW TRADE

WITH MEXICO IMPACTS EMPLOYMENT IN THE UNITED STATES 1 (2016),

https://www.wilsoncenter.org/sites/default/files/growing_together_how_trade_with_mexico_imp

acts_employment_in_the_united_states_2.pdf (“[O]ne out of every 29 U.S. workers has a job

supported by U.S.-Mexico trade. . . . [I]f trade between the United States and Mexico were halted,

4.9 million Americans would be out of work.”); U.S. CHAMBER OF COMMERCE, THE FACTS ON

44

The capacity to produce a stable system of international economics is

likely to determine also how solid a force the Free World really is.

Great parts of South and Central America at this moment find that their

fate lies in the dubious balance of certain world prices (notably, coffee,

cotton, copper and wheat) and of continued consumption of their oil.

They are demanding stabilization exactly as American farmers demand

stabilization of agricultural prices, but for more reason: their lives are

at stake. Other parts of the Free World also depend for their economic

life on the United States: this is particularly true at the moment of Great

Britain.79

Nor would he likely retreat from his call for the U.S. to engage in “deep[]”

and “fundamental[]” thinking about building and strengthening international

institutions that would put in place global plans to address the universally felt need

of human beings for economic security:80

The time has come when, I think, both the West and the East are likely

to consider seriously reasonable global plans. This is not because of

sudden conversion to internationalist faith. It is, quite simply, because

the forces with which we all work, whether in economics or in

international ballistic missiles, are themselves worldwide—and no

other solutions make sense.81

Another bit of realism would weigh on Berle. Berle is famous for his work

focusing on the problem of constraining corporate power in a society that had not

yet created a national system of economic regulation that could hold corporations

fairly accountable for operating in a manner consistent with societal values and

NAFTA 1 (2017), https://www.uschamber.com/sites/default/files/the_facts_on_nafta_-_2017.pdf

(“Trade with Canada and Mexico supports nearly 14 million American jobs, and nearly 5 million

of those jobs are supported by the increase in trade generated by NAFTA.”). 79 Basic Elements, supra note 10,at 434. 80 Id. at 435. 81 Id.

45

needs.82 Given that, it would seem logical that with the emergence of huge

corporations that in reality have no national identity83—as exemplified most easily

by the inversion trend84—he would have an even stronger desire to create a globally

82 See, e.g., Adolf A. Berle, Jr., Corporate Decision-Making and Social Control, 24 BUS. LAW.

149, 152 (1968) (“The corporate system of our time . . . can and should conform to social

requirements; it can and should lend help to government and to quasi-public and other institutions

whose task is to develop a society both good and just.”); Nick Lemann, Institution Man, SEATTLE

U. L. REV. (forthcoming 2018) (“[What] Berle had really wanted was to enhance the power of the

government to the point where it could outmatch the power of the corporation. He had no quarrel

with centralized power, as long as it was used for good. The drama of his career was the harnessing

of the corporation, not its destruction; indeed, in order to work, his vision of a good society actually

required that corporations be as big and powerful as possible.”). 83 See, e.g., ADOLF A. BERLE, JR., ECONOMIC POWER AND THE FREE SOCIETY 12 (1957) [hereinafter

FREE SOCIETY] (some large corporations “can be thought of only in somewhat the way we have

heretofore thought of nations. Whether we like it or not, this is what has happened. . . . The dangers

are obvious. But history cannot usually be reversed,” and that “a body of doctrine which will

control power” is needed to deal with the growing power of those corporations); Adolf A. Berle,

Jr., The Corporation as Revolutionary, BUS. WEEK, Mar. 7, 1970, at 6 (“Americans are discovering

the rapid emergence of a discernible ‘world economy.’ In many respects American business is

only equivocally bound to the American state.”); Adolf A. Berle, Jr., Corporations and the Public

Investor, 20 AM. ECON. REV. 54, 58 (1929) (arguing that it was critical to address the growth of

large corporations because many of them were more economically important than individual U.S.

states, and noting that AT&T alone would have been the 27th richest state in the nation itself, on

the basis of its wealth); Adolf A. Berle, Jr., Corporate Decision-Making and Social Control, 24

BUS. LAW. 149, 149‒50 (1968) (“Transition of the large corporation from a private enterprise to a

social institution has now been accomplished and is generally recognized. Their size, breadth of

power and unlimited scope dominate the American economic scene. . . . A few hundred

corporations dispose of more than two-thirds of America’s enormous non-governmental economic

activity, and their number tends to diminish though the volume of economic activity steadily

increases. . . . Whereas, a generation ago, the law was preoccupied with assuring that managements

did not victimize their shareholders, preoccupation today is with the extent of their social and

political and economic responsibility for the health of the American economic machine, and for

employment and welfare of its citizens.”). 84 See generally Eric Talley, Corporate Inversions and the Unbundling of Regulatory Competition,

101 VA. L. REV. 1649, 1681 (2015) (noting that between 1994 and 2004, 22 inversions were

announced, but between 2004 and 2014, 49 inversions were announced, twenty of which were

announced in or after 2012).

46

effective system of economic regulation.85 Otherwise, the very mismatch that he

thought characterized the pre-New Deal era would simply return, but with

corporations being even more difficult to constrain, because they would no longer

be rooted in any deep way in any nation, much less a particular community.

But, Berle’s realism was never valueless. As important to the lack of realism

involved in retrenchment, that sort of retrenchment would involve pitting the

working people of each nation against each other, as opposed to finding ways to

work together to make the world a better place for all. Like Martin Luther King who

believed that “the arc of the moral universe is long but it bends toward justice,”86

Berle viewed that the arc of history favored political forces:

(1) which tend to approach universality within their field of

application; and

(2) which give to individuals a sense of harmony with the universal

pattern.87

85 Berle viewed national borders as having already lost their logical relevance to economic

regulation by the 1950s. Basic Elements, supra note 10, at 429 (“A second supranational

community was proposed by the United States: EURATOM. Now the European nations have

formed ‘Euromarket’ (the European Economic Community) which is just getting under way. What

is happening is a slow striation of political sovereignty. Each of these new organizations—and

they themselves are already grouping into a single European complex—does take away some

fragment of power from the constituent nations, but gives each access to a wider and more balanced

complex of supply and need. This is frank recognition that modern economic processes have little

to do with historical, ethnic or even political boundaries, and cannot be imprisoned within them if

populations are to live acceptably. Many other groupings are in progress.”); see also NATURAL

SELECTION OF POLITICAL FORCES, supra note 10, at 17 (noting that political forces should assign

responsibility to correspond to the level of concentrated power). 86 Martin Luther King, Jr., Sermon at Temple Israel of Hollywood (Feb. 26, 1965). 87 NATURAL SELECTION OF POLITICAL FORCES, supra note 10, at 17.

47

By contrast, Berle believed that the “natural selection” processes relevant to

human political development “discard[] political forces”:

(1) which are based on limitative conceptions such as exclusion,

aggrandizement, hatred, and the like; and

(2) which tend to concentrate power without modifying that power

by imposing, in some form, corresponding responsibility.88

He touted the advantages that the West’s form of managed capitalism had for

working people over those of the communist system, arguing that “[t]oday the

conception of more or less equal opportunity and economic participation—the

attractive heart of the original Communist ideology—is far better expressed in

Scandinavia or the United States than in Russia itself, judging by results.”89

Berle was an ardent believer in the advantages of democracy, not just for the

U.S., but the world:

The standards we have here studied, seem to predetermine the choice

of thinking men. The ideal of free democracy excludes none; includes

all. It does not invoke hatred, or master races, or divide the peoples and

countries of the earth into higher and lesser forms of life. It condemns

no class to destruction. Most of all, it recognizes every man and woman

as an individual having worth and dignity. The emotions to which

democracy appeals are those of brotherhood, mutual help, tolerance,

and kindness. One would like to think of them as akin to universal love,

were that ideal attainable by any political force.

So, it seems, as in other centuries, a world choice is again compelled—

and again possible. The travail is great. The opportunity is greater still.

If selection now is made well, our children may enjoy a plateau of

88 Id. 89 Id. at 68.

48

kindly peace enduring longer, intellectually more fertile, spiritually

more serene, than any history has yet known. Multitudes are in the

valley of decision, but, in the words of Joel, the day of the Lord is near

in the valley of decision.90

Given his values, one can venture with some confidence that Berle would have

viewed with disdain the nativist arguments made by President Trump, the UK

Independence Party in Great Britain, the National Front in France, and similar parties

to exploit the economic insecurities of the American and European working and

middle classes. Although Berle would have understood why those directly affected

by dislocation would be tempted by those arguments,91 no doubt he would have

found it dismaying to have demagogues gain traction by arguing that slamming the

90 Id. at 99. 91 In his writings, Berle argued for the need for a value-based plan to address economic insecurity,

in part because that insecurity was being exploited by fascists and other unsavory elements. See,

e.g., Adolf A. Berle, Jr., We Are Looking Down the Gunbarrels, 3 VITAL SPEECHES OF THE DAY

655, 656 (1937) [hereinafter We Are Looking Down the Gunbarrels] (“If a country must exchange

with other countries to live, and if business is interested in peace—then business must arrange to

effect the exchange. Otherwise it must recognize that it cannot meet its function in a modern

world, and must abandon the field to the Communists and the Fascists, who are now asserting that

private business has become merely predatory: and that the State must take over all functions. We

might as well use blunt language today. Wherever business cannot meet economic need, the

totalitarian state moves in.”); Adolf A. Berle, Jr., Bread and Guns, 47 SURVEY 269 (1921)

[hereinafter Bread and Guns] (“No American farmer or laborer, left to himself, would voluntarily

shoot or be shot at by a Japanese peasant. The Japanese thinks the same. Fighting is the last thing

he wants to do. Until each has been hypnotized by propaganda or chicane into believing that the

other strains to bring fire and destruction into his country, either would make a friend of the other

should they chance to meet. . . . They will fight any one if they have to; they do not want to fight

at all. But interpose the machinery of government; let it start its propaganda, focusing national

attention on preserving some point of honor or some avenue of trade—let it set up the doctrine of

‘interests abroad’—and war looms first as a disagreeable possibility, then as a matter of necessary

defense, and at last blooms forth as a sacred duty to purify the world. Yet after the war is over and

the tale is told the fighter’s table is less well set than he had never fought and usually the whole

issue of the thing would not have made a penny’s difference to ninety-five out of every hundred

million people in the warring countries, whatever the outcome.”).

49

doors on immigrants and international trade would magically cure their problems.92

But realist that he was, he would not be surprised when those demagogues were

facing off with Davos Democrats, rather than descendants of FDR willing to give

full-throated voice to the need to address the legitimate demands for economic

security and more economic equality coming from working people in the U.S. and

EU.93 Fear when unaddressed is a powerful motivator,94 and the absence of

92 See generally Drawbridges Up, THE ECONOMIST (July 30, 2016),

https://www.economist.com/news/briefing/21702748-new-divide-rich-countries-not-between-

left-and-right-between-open-and (noting that “drawbridge-uppers,” those politically aligned by

their support for a closed nation, their “suspicion of trade and immigration,” and disdain for “their

country’s elite, whom they invariably describe as self-serving,” “are firmly in charge” in Poland

and Hungary, “in France Marine Le Pen, who thinks that the opposite of ‘globalist’ is ‘patriot’,

will probably make it to the run-off in next year’s presidential election. In cuddly, caring Sweden

the nationalist Sweden Democrats topped polls earlier this year, spurring mainstream parties to get

tougher on asylum-seekers. Even in Germany some fear immigration may break the generous

safety net. ‘You can only build a welfare state in your own country,’ says Sahra Wagenknecht, a

leader of the Left, a left-wing party.”); see generally RODRIK, supra note 47, at 172 (“Right-wing

media outlets and think tanks have spun tales that led voters with stagnating incomes to attribute

their hardship to minorities—African Americans, immigrants, women on welfare—that the

government has supposedly favored over them. As a result, conservatives have been able to retain

power despite their pursuit of economic and social policies that are inimical to the interests of the

middle and lower classes.”). 93 In an interesting study of post-war developments in addressing poverty and inequality, Professor

Samuel Moyn argues that approaches to economics that address only the alleviation of poverty,

and not the need to constrain immense inequality, are themselves insufficient. As he notes, FDR

focused on both alleviating poverty and reducing inequality, and advocated taxation and other

policies designed to make sure that the rich contributed to increasing economic opportunities for

the many. SAMUEL MOYN, NOT ENOUGH 68‒88 (2018). As Professor Moyn notes, these policies

required the sort of muscular governance that Berle stood for: “In the alternative tradition of

welfare combining the aims of sufficiency and equality, . . . a strong state—built with

interventionist capacities, funded by high taxes, and able to call forth the zeal of its people—served

as the equalizing power. Equality was never achieved by stigmatizing governance but instead by

enthusiasm for it and even devotion to it.” Id. at 218‒19. 94 See generally id. (describing that “[n]early all drawbridge-up parties argue that their country is

in crisis, and explain it with a simple, frightening story involving outsiders.”).

50

countervailing hope for real action leaves a void for negativity that would have been

all too familiar to Berle.

V.

From these building blocks, one can see emerge the framework that might

form the basis for a Berle-backed plan for a global New Deal, based not on

expanding trade within a pre-New Deal laissez-faire formulation, but on ensuring

that the protections working people had gained through the New Deal and European

social democracy were preserved and expanded to the full scope of the international

economy.95 That framework would focus on objectives that could be universalized

and that involved widely shared understandings of fundamental economic rights.

That framework would recognize the inevitability that markets and large

corporations will, and largely already have, outgrown the ability of individual

nations to regulate. That framework would take into account the compelling

scientific case for urgent global action to address climate change, and the compelling

95 Reshaping the American Economy, supra note 5, at 219 (“Federal responsibility for the

functioning of the American economy is taken for granted. Disbelief if not outright denial is

encountered when the hands-off, night-watch man, laissez-faire theory of federal government,

obtaining until his era, is set out. In current context, it is hard even to imagine the possibility of

having an economy without federal management of currency and credit, without federal policing

of securities issues and the stock market, without minimum wage laws and social security, without

a National Labor Relations Act, without an agricultural stabilization program, perhaps even

without federal management of electricity, certainly without the highly articulated statistical

services in whose development Roosevelt was so vividly interested. No one thinks of housing

without the credit facilities offered through the Federal Housing Authority or conceives that the

capital supply of the country could be cut off (as was attempted in 1934) merely because

investment bankers decided not to offer securities to the public in protest against passing the

Securities Act.”).

51

economic case that doing so can help increase the economic security of working

people affected by globalization and scientific advancements.

As a realist, Berle would also likely see value in steps that could be taken

locally and by way of non-government organizations, at a time when the possibility

of progress by national governments in isolation, much less in concert, is hampered

by nativist impulses on the right and the timidity of Davos Democrats on the left.96

Sensible local measures could, like the steps taken in individual American states

before FDR took office as President,97 help some hurting people right now and

96 The tensions that economic insecurity can produce on the left are well illustrated by the rise of

a right wing political party in Italy headed by a comedian: the “Five Star Movement.” An incisive

essay describes the agenda of this party in terms that make these tensions all too evident.

Alexander Stille, Not So Funny, N.Y. REV., May 10, 2018, at 40 (“The FSM is another expression

of the populist wave that has swept so many Western democracies in the past several years. It has

a loud, foul-mouthed, and charismatic leader who dares to say what others only think; it makes

innovative use of digital technology and social media; it advocates economic protectionism; it

stokes anti-immigrant sentiment, violent anger at the traditional press, and skepticism of

established experts and professional politicians. And it has a soft spot for Vladimir Putin. The

FSM also draws on left-wing populist ideas: a guaranteed minimum income, environmentalism,

and a deep distrust of global capitalism. It has developed new forms of political participation and

expressed a strong idealistic desire to clean up politics, limit the power of professionalism

politicians, and use the Internet to make politics more responsive to ordinary citizens. How a blog

started by a stand-up comic has become the largest party in one of Europe’s largest countries is

worth serious attention, both for what it portends for Italy and for what it suggests about our

time.”). 97 FDR4FREEDOMS, BECOMING A LEADER: FDR BEFORE THE PRESIDENCY 6 (observing that FDR’s

initiatives, as Governor, including his creation of the Temporary Emergency Relief

Administration, which made New York the first state to have its own agency to coordinate relief

for unemployment and impoverishment, support for unemployment insurance, and advocacy for a

federal old-age insurance program, “were forerunners of the New Deal FDR would advance on a

national scale as president”); see also Franklin D. Roosevelt, Discussion of 1930 Legislative

Session—First Report to the People (Apr. 16, 1930) (summarizing the achievements of the 1930

legislative session in addressing such issues as infrastructure, job creation, poverty, financial

regulation, parole reform, and farmers’ economic stress).

52

provide a basis for later national and international action.98 But, for that very reason,

Berle would wish there to be a focus on areas of wide agreement and potentially

large impact, so that these local initiatives could eventually converge into global

norms, and eventually laws as binding as those that protect access to markets.99

One area where I suspect that Berle would not join in full-throated Trump

bashing is in the President’s willingness to consider using negotiations over tariffs

and other terms of trade to protect legitimate American interests and, even more

important, to ensure that the key protections for working people are not eroded by

allowing nations and corporations that put their foots on the necks of workers and

that despoil the environment free access to the markets of nations committed to the

98 See also Bruce Katz, Why Cities and Metros Must Lead in Trump’s America, BROOKINGS INST.

(Nov. 21, 2016), https://www.brookings.edu/research/why-cities-and-metros-must-lead-in-

trumps-america/ (suggesting that US metropolitan areas, which “house 84 percent of our

population and generate 91 percent of our GDP” will need to proactively engage with the federal

government to secure support for social and economic concerns, but will also need to “raise

substantial capital on their own to make meaningful and durable contributions to innovation,

infrastructure, human capital, children, and quality places in their communities” through

“metropolitan financing,” which involves “new financial instruments and practices [that] have the

potential to channel private and civic capital toward a number of nontraditional activities, like

inclusivity and environmental sustainability,” “new intermediaries . . . emerging to bring disparate

sectors of society together,” and “new breeds of special-purpose public, quasi-public, and civic

institutions [that] are forming to unlock the value of underutilized public assets and finance a wide

range of transformative projects”) (emphasis omitted). 99 Adolf A. Berle, Jr., Both Dreamers and Diplomats Are Needed, 10 VITAL SPEECHES OF THE DAY

150, 151‒52 (1943) (“The vast problem of securing a reconstituted world system which can

maintain peace and recognize human rights can only be carried forward by finding and increasing

a common denominator of public opinion.”); Basic Elements, supra note 10, at 433 (“It is evident

that the stalemate can only be broken by some entirely new picture of world organization,

corresponding to the realities imposed by the deep forces I have mentioned. So the time has again

come for global thinking.”).

53

values of the New Deal and social democracy.100 Precisely because Berle was a

realist, he would know that associating the word “free” in any way with China is

Orwellian,101 and that most of our economic competitors use mercantilist tactics to

100 One of the most distinguished scholars studying the effect of globalizing trade is, like Berle

was, a pragmatist. In his most recent work, Professor Dani Rodrik explains why he views it as

advisable to not adopt purist, free market principles as a basis for trade agreements in a world

where none of the counterparties in fact act on a pure, free market basis. See generally RODRIK,

supra note 47. 101 Robert Kuttner, Trump: The Bull in the China (Policy) Shop, AM. PROSPECT (Mar. 6, 2018),

http://prospect.org/article/trump-bull-china-policy-shop (“Beijing subsidizes production, floods

the world with a glut of products at prices below their true costs, blocks imports, demands trade

deals with western ‘partners’ on terms that transfer technology and leadership to China, uses state

intelligence agencies to steal intellectual property whose transfer it can’t coerce—and then

demands and gets special treatment under the WTO as a developing country! All of this grossly

violates free-market norms, and grabs market share in industry after industry at the expense of

nations like the U.S. that mostly play by the rules. . . . Raising tariffs on state-subsidized steel and

aluminum is a good and necessary part of the right policy. Trump’s version, so far, has energized

his critics and united America’s adversaries. It’s time for the mainstream to take back the

challenge of how to deal with China. Otherwise, we leave the field to Trump.”); Clyde Prestowitz,

China’s Not Breaking the Rules. It’s Playing by a Different Game, FOREIGN POL’Y (Feb. 17, 2012),

http://foreignpolicy.com/2012/02/17/chinas-not-breaking-the-rules-its-playing-a-different-game/

(“The global economy is, in fact, sharply divided between those who are playing the free trade

game and those who are playing some form of mercantilism. . . . It’s like watching tennis players

trying to play a game with football players. It doesn’t work, and insisting on playing by the rules

doesn’t help, because both sets of teams are playing by the rules of their game. In any case, there

are a lot fewer clear cut rules than most people think. For example, probably the biggest single

factor in the off-shoring of large chunks of U.S. based production and millions of jobs abroad has

been the packages of financial investment incentives offered by China and others to global

companies to encourage them to relocate production. More jobs have been lost to these packages

than to currency manipulation. But you can’t complain about rules violations because there are no

rules to cover these investment incentives. At the federal level, America[] doesn’t offer such

incentives but there is not [a] WTO or IMF or other rule against it. Nor is the United States

proposing any rules in this area.”); Robert L. Kuttner, Development, Globalization, and Law, 26

MICH. J. INT’L L. 19, 28 (2004) (“[T]he most successful economies of the post war era have been

precisely those, mainly in Asia, that combined a fierce entrepreneurial skill with a strong

developmental role for the state; a combination of capitalism and neo-mercantilism. It is bizarre

that champions of laissez-faire economics claim China’s ten percent annual growth rate as

evidence for their side of the argument. This is a nation, after all, that pegs its currency, has neither

54

advantage their own industries.102 Berle would not hesitate to have the U.S. engage

on these issues, but his spirit would be different than Trump’s.103 Rather than pursue

goals in isolation, Berle would seek to have the United States build alliances that

would make fair treatment of workers, proper regard for the environment, and other

widely shared principles of the New Deal central to trade agreements.104 Throughout

transparent capital markets nor western style human rights, whose industry and banking system is

still dominated by the state, and who allows in foreign investment only on carefully negotiated

terms.”). 102 The case of China raises another realist challenge Berle would easily grasp: when a participant

in international trade has non-market objectives for sponsoring corporate involvement in the

market—such as the capture of technology and resources to gain military muscle and strategic

influence rather than profits—should that participant benefit from the rules of the game, the

principles which it does not accept? Distinguished scholars associated with Berle’s beloved

Columbia have issued a provocative proposal as to how this question might be more effectively

and fairly addressed through multilateral action by the OECD. See Jeffrey N. Gordon & Curtis J.

Milhaupt, China as a “National Strategic Buyer”: Towards a Multilateral Regime for Cross-

Border M&A (European Corporate Governance Institute, Working Paper No. 407, 2018); see also

RODRIK, supra note 47, at 29, 134‒35 (explaining that China has sought access to trade agreements

designed around economic principles, such as a largely private sector approach to business, that

its mercantilist policies do not accept, and that China is a repressive regime that approaches

economics as an adjunct to its larger national ambitions). 103 For example, in a 1937 speech, Berle characteristically took a practical approach, whereby he

argued for lowering tariff barriers but in a manner that took into account the legitimate interests of

those negatively affected:

Good national and international business would suggest wiping out the tariff, giving

the foreign importer free play. This would disturb an American group of producers

and labor. Well, suppose it does. Who is hurt, and how much? What will it cost

to compensate the people who are asked to retire from the field? In some cases, a

small tariff for a short time, devoted to readjustment wages, for the displaced labor

and readjustment costs for the displaced plant would save money for everyone all

around.

We Are Looking Down the Gunbarrels, supra note 91 at 656; see also Other Forces Which

Determine Our Foreign Policy, supra note 74 (making a similar argument). 104 Professor Wang’s excellent article in this symposium does a thorough job of showing Berle’s

career-long commitment to building a system of international relations, including those affecting

the economy, that would promote not only peace, but economic security, on a win-win, not zero-

55

his career, Berle believed that it was critical to promoting a peaceful world that the

United States and business elites help facilitate more international commerce.105

Berle’s writings suggest that he would want the U.S. to solidify its trade

relations with the EU, the broader OECD, and other nations committed to social

democracy, and to use that base as the foundation for a growing world framework

that made protection for workers and the planet as important as protection for capital

and product flows.106 In other words, he would be aggressively internationalist, but

sum, basis. See generally, Jessica Wang, Looking Forward in a Failing World: Adolf A. Berle,

the United States, and Global Order in the Interwar Years, SEATTLE U. L. REV. (forthcoming

2018). Some of Berle’s writings making this point include Peace Without Empire, supra note 12;

Welfare of the Masses, supra note 6; and Adolf A. Berle, Jr., The Economic Interests of the United

States in Inter-American Relations, 4 DEPT. OF STATE BULLETIN 756, 757 (1941). 105 In fact, before WWII, Berle wrote a series of articles linking economic cooperation to the

avoidance of, and later to winning, the war against fascism. E.g., We Are Looking Down the

Gunbarrels, supra note 91, at 655 (“We have learnt that a major cause of war is economic distress,

especially the distress of overpopulated countries seeking necessary supplies for their peoples. To

have these supplies they must be able to pay; to pay they must be able to sell; to have markets for

their own products. . . . A great, self-contained nation like our own, can insist, for a short time, that

the problem is mainly one for foreigners; that we can worry along without selling farm products

and certain manufactures abroad; that we are better off by rigidly excluding virtually all foreign

goods from our markets. But it is well to look at the other side of the picture. . . . Certain of the

major central European powers, and Japan, must import merely to eat. If, in addition, they wish

to develop a high standard of living, they must import still more. To do this they must export. If

commerce fails, there is only one resource left—that of conquest. . . . It is the job of American

business not to work out new methods of embargo disguised as tariffs or sanitary regulations to

keep out goods, but to work out ways and means by which goods can be let in. . . . Every tariff bill

has a bayonet wrapped up in it.”); id. (“It is the job of American business not to work out new

methods of embargo disguised as tariffs or sanitary regulations to keep out goods, but to work out

ways by which goods can be let in.”); see also Bread and Guns, supra note 91; Other Forces

Which Determine Our Foreign Policy, supra note 74; Adolf A. Berle, Jr., Relations Between the

Two Americas, 5 VITAL SPEECHES 149 (1938). 106 A good example of Berle’s understanding of the complexity, but necessity, of forging

international economic understandings is his call for “Peace Without Empire,” which focused on

the nations of the Americas. Peace Without Empire, supra note 12, at 108; see also The Soviet-

56

insist on moving toward the values upon which the post-World War II international

economic order were originally to be based, values that made the interests of

working people and full employment central to understandings about opening

markets to international trade.107

What might the basis for such an agenda consist of? I will sketch out just

some of what could be the key elements.

Chinese Complex, supra note 11, at 67–68 (“This is not the time or the place to elaborate the

emerging principles of what seems to be the order demanded by the second half our century.

Enough to say that each country must apparently be intensely nationalist in preserving certain

values assumed by it to be crucial—as in the United States the fostering and developing of

individuality and of the unfettered minds and souls of free men appears to be a value without which

life itself means little. To maintain its power and right to preserve these values a nation must, it

seems, join at least in regional combinations. . . . [I]f there is ever to be a world at peace, a nucleus

of world organization capable of becoming in time custodian of peace and administrator of a

degree of law must be built and fostered and maintained—and for this reason if the United Nations

were to dissolve tomorrow the world would have to reinvent it.”). 107 The Coming Epoch, supra note 9, at 614 (“The foundation of society, national and international,

must lie in the satisfaction of the elementary desires of hundreds of millions of men who want to

make a life for themselves, and, while making it, to be free of fear of sudden conquest, free of fear

of oppression in thought or spirit, and free of the fear of being tossed onto a scrap heap by military

or economic processes over which they have no control.”). In that same article, Berle said that

after the emergency of World War II was over, “we shall face the titanic task of turning tens of

millions of men from the work of defense and of war into the work of peaceful life,” and that:

[W]e shall also wish to do this not only for ourselves, but for other like-minded

peoples as well. The food and products of the Americas will be urgently needed in

many parts of the world. We on our side will need materials and other products if

we are to rebuild on a scale equal to the new conceptions of life. We shall have to

fit our work into that of other nations as widely as may be possible. We may have

to begin on a relief basis, as happened in 1920; but it must evolve into a more solid

and permanent system of mutual exchange of benefits as the new and broader

international basis is established.

Id.

57

I start with workers. An international movement to make sure effective

minimum wage legislation was a condition of being a participant in international

markets would surely be a sensible Berlean agenda item.108 Developing an

international movement that would perhaps focus on a tiered system of four or so

“living wage” targets, appropriate to various segments of the world economy, but in

all cases providing more leverage to working people and diminishing the potential

for exploitation,109 would involve a push for progress that would have almost

108 Property, Production and Revolution, supra note 8, at 9–10 (“A second line of development

impinges directly on management operation. It arises from an evolving social concept of what

American civilization should look like. It began with the minimum wage legislation and the

Wagner Act, later revised by the Taft-Hartley Act and modified by the Landrum-Griffin Act.

These statutes, and the growing body of case and administrative law under them, limit the decision-

making power of corporate managements with respect to wages and labor relations. Of interest is

the fact that these laws in the main (though not universally) are applied to general enterprise for

profit-making operations in production or commerce.”). An interesting new study by the United

Way illustrates the utility of a focus on a living wage. In its “ALICE Project” the United Way

sought to identify how many households that, although being above the federal poverty line, do

not earn “enough to afford basic necessities.” UNITED WAY, ALICE STUDY OF FINANCIAL

HARDSHIP 1 (2016). ALICE stands for “Asset Limited, Income Constrained, Employed,” and

involves households above the poverty line “but with not enough to live and work in the modern

economy.” Id. In the 13 states that participated, at least 31% of households were in this category

in even the most prosperous of the states, and more than half of jobs in every surveyed state other

than Connecticut paid less than $20 per hour. Id. at 3‒4. Putting a point on Berle’s emphasis on

economic security, 72% to 84% of families in surveyed states lacked any saving to address a loss

of unemployment, an unexpected medical, home, or auto expense, or other adverse development.

Id. at 4. This is especially concerning given the fact that less than a fourth of unemployed workers

receive unemployment insurance. Will Kimball, Unemployment Insurance Benefits Reaching a

Smaller Share of Unemployed Workers, ECON. POL’Y INST. (Mar. 18. 2015),

https://www.epi.org/publication/unemployment-insurance-benefits-reaching-a-smaller-share-of-

unemployed-workers/. Consistent with data suggesting that the recovery from the Great Recession

has been uneven, the study showed that the percentage of ALICE households in each surveyed

state had grown from 2007 to 2014. UNITED WAY, ALICE STUDY OF FINANCIAL HARDSHIP 5

(2016). 109 See generally Pankaj Ghemawat, People Are Angry About Globalization. Here’s What to Do

About It, HARV. BUS. REV. (Nov. 4, 2016), https://hbr.org/2016/11/people-are-angry-about-

globalization-heres-what-to-do-about-it (“According to a recent IMF report, technological

58

consensus international support.110 So too would requirements for safe working

conditions, a strong ban on child labor, increased requirements for children to attend

school, and limits on working hours.111 And yes, it would involve restoring and

revitalizing the ability of workers in the U.S. to join together in unions and bargain

for better pay and working conditions.112

It would also require a commitment to moving toward a system for health care

that made sure that workers had health security that was not tied to employment with

progress and the decline of unions have both contributed to the increase in inequality, with

globalization playing a smaller but reinforcing role. . . . If the Netherlands can preserve a relatively

reasonable income distribution despite having a trade-to-GDP ratio six times that of the U.S., it

seems implausible to blame the much higher level of inequality in the U.S. economy on

globalization. But not all analysts agree on this point. . . . Attending to inequality is arguably more

politically palatable now, given the sharp increases in inequality and a better understanding of its

social costs—including possibly triggering a more populist-protectionistic-xenophobic phase.”). 110 COUNCIL ON FOREIGN RELATIONS, supra note 45, at 34 (reporting the results of a poll of

seventeen countries indicating that, on average, 81% of respondents, 93% of respondents from the

United States, and 95% of respondents from Great Britain think that parties to international trade

agreements should be required to maintain minimum standards for working conditions). 111 A general consensus exists in the West that humans cannot live a good life without an active

role for government in ensuring their freedom from, among other things, working a 70-hour work

week, being employed as a child, laboring under unsafe conditions, breathing air and drinking

water polluted by manufacturing concerns, suffering injuries from unsafe products, and providing

for themselves in their golden years without any societal help. For example, the Charter of

Fundamental Rights of the European Union includes protections on the topics of maximum

working hours, child labor, workplace safety, environmental concerns, consumer protection, social

security and social assistance. Charter of Fundamental Rights of the European Union arts. 31–32,

34–38, 2000/C 364/01, 364/8 (Dec. 18, 2000). 112 As a general matter, it appears that younger Americans have a much more positive view of

unions. Harold Meyerson, What Now for Unions?, AM. PROSPECT (Mar. 26, 2018),

http://prospect.org/article/what-now-unions (citing poll data that 76% of Americans under 30

approve of unions and that 75% of new union members in 2017 were under 35); see also AFL-

CIO, WORKING FOR OUR FUTURE: POLICIES FOR A NEW GENERATION OF WORK 7 (2017),

https://aflcio.org/sites/default/files/2017-03/Working%2BFor%2BOur%2BFuture%2BPlatform

final.pdf (“The union premium is highest for younger workers. For 16- to 24-year-olds, union

membership means 21.75 percent higher wages, and for 25- to 34-year- olds, a union card means

19.19 percent more pay.”).

59

any particular employer, a move that would reduce the disincentive for corporations

to employ American workers and reduce the anxiety felt by employees who are

lectured to recognize the reality that they will change jobs many times in a dynamic

economy, but who face losing access to health care when they do so.113

113 Because health insurance in the United States remains predominantly tied to employment,

employers have an incentive to locate jobs elsewhere and employees can be resistant to

transitioning jobs because of health care insecurity. AARP, JOB LOCK AND EMPLOYER-PROVIDED

HEALTH INSURANCE: EVIDENCE FROM THE LITERATURE 1 (2015),

https://www.aarp.org/content/dam/aarp/ppi/2015-03/JobLock-Report.pdf (“The need for health

insurance can affect a worker’s decision to look for a new job, start a business, retire, or

temporarily leave paid employment to care for a young child or a frail family member. Not being

able to find another job that provides health insurance or to afford insurance in the individual

market may lead workers to stay at a job even when it is a poor fit. . . . The likely range of a job-

lock effect is a reduction in turnover—the rate at which people leave jobs—of 15–25 percent

among workers with [employer-provided health insurance].”); Erik Holm, Buffett: “Medical Costs

Are the Tapeworm of American Economic Competitiveness, WALL ST. J. (May 6, 2017, 4:05 PM),

https://www.wsj.com/livecoverage/berkshire-hathaway-2017-annual-meeting-analysis

(describing how Warren Buffett “mock[ed] corporate executives who complain about taxes, saying

they all know that health care costs are the real issue,” at Berkshire Hathaway’s 2017 annual

meeting and quoting Buffett as saying: “Medical costs are the tapeworm of American economic

competitiveness”); Toni Johnson, Healthcare Costs and U.S. Competitiveness, COUNCIL ON

FOREIGN RELATIONS (Mar. 26, 2012), https://www.cfr.org/backgrounder/healthcare-costs-and-us-

competitiveness (“For large multinational corporations, footing healthcare costs presents an

enormous expense. General Motors, for instance, covers more than 1.1 million employees

and former employees, and the company says it spends roughly $5 billion on healthcare

expenses annually. GM says healthcare costs add between $1,500 and $2,000 to the sticker

price of every automobile it makes.”); see generally U.S. CENSUS BUREAU, HEALTH INSURANCE

COVERAGE IN THE UNITED STATES 1 (2015), https://www.census.gov/content/dam/Census/library/

publications/2016/demo/p60-257.pdf (55.7% of Americans had employer-based health insurance

in 2015); Press Release, Bureau of Labor Statistics, Employer Costs for Employee Compensation

(June 8, 2018), https://www.bls.gov/news.release/ecec.nr0.htm (on average, health insurance

benefits make up 7.5% of total compensation for workers in private industry). Berle was also

concerned about this issue. See, e.g., The Quest for Individual Security, supra note 6, at 407

(describing “the problem of sickness and health insurance” as a “major problem of personal

security” that needs to be addressed “by some cooperative method throughout the community”);

id. (focusing on the analogous problem of how workers could change jobs and not lose the credit

they have earned towards their pensions).

60

Finally, long term, it would involve embedding the protections for working

people in the international regimes dealing with trade, as was originally envisioned

by FDR and others planning the post-WWII world. A constant, unrelenting

insistence that the protection of workers should be fundamental to all trade

understandings, made a duty of the WTO to enforce, and not relegated to weaker

organizations like the ILO,114 would be Berlean and timely.115

114 See generally Brown, supra note 47, at 108 (“Labor rights activists nevertheless argue in favor

of some link between the ILO and the WTO on labor issues in order to provide the ILO with

enforcement power beyond its current practice of monitoring and providing members with advice

and technical support. . . . While the ILO may be effective in promoting discussion between

workers and member governments, it has none of the remedies available to members of the WTO.

For this reason, linkage between the ILO and the WTO has been suggested as a way of transferring

some enforcement power on trade policy to labor standards.”). 115 In a speech in 1935, Berle distanced himself from those whose interest in trade questions dealt

with whether their business would increase or decrease depending on tariffs and other barriers,

associating himself instead with those who viewed themselves as members of a common

international family of human beings. Other Forces Which Determine Our Foreign Policy, supra

note 74, at 416 (“We know something of the great glory of a common intellectual heritage. We

have shared the aesthetic fertility of many countries. We have no truck with second-grade hatreds.

Many of us have friends in all countries and propose to have more. Our job is to study to see

whether new ground cannot be found.”). In that speech, he also indicated his view that “where our

manufacturers have succeeded, it was due not to a tariff monopoly but to the peculiar efficiency

of American products.” Id. He then put his finger directly on the problem that endures to this day:

We shall find that the basis of that problem was really a question of whether labor

competed with labor, that is to say, whether international competition came to be

competition in standards of living. Then we would begin to grapple with the real

problem which is a desire not for tariffs which rise and change price levels, but for

common agreements which would make for human standards of living throughout

the world.

Id.; see also Welfare of the Masses, supra note 6 (arguing that the “inter-American group of

nations” must ensure that workmen receive “a fair share through wages and social insurance”); see

generally Adolf A. Berle, Jr., The Construction of a General International Organization, 10 DEPT.

OF STATE BULLETIN 97 (1944) (arguing that the creation of a post-war international organization

to govern security and economic issues was vital to creating the conditions for a lasting peace and

stable world order).

61

Likewise, a Berle-infused agenda would focus on providing retraining and

transition assistance to workers needing to change careers or find new jobs.116 U.S.

investment in this area has lagged for years, being given lip service but no funding.117

Berle recognized the need for transitional assistance of this kind.118 Similarly, his

focus on the value of education is relevant here,119 as much of the economic

116 The Law and the Social Revolution, supra note 69, at 594 (arguing that, to “distribut[e] income

when the labor of an individual is not needed,” we must “redefine[e] the rights and the status of

individuals in terms of economics—just as we redefine personal rights and status in terms of civil

and political privileges in the Declaration of Rights in the United States Constitution. The law

will have to be built upon this redefinition, the mechanics of which might be, for example,

enrolling all able-bodied individuals into a labor reserve, providing for their necessities, their

sickness and unemployment insurance, differentiating their wages so that the married man with a

family receives enough to support the family instead of being placed on a dead equality with the

bachelor, and so that women performing equal tasks receive an equal income—an income enlarged

when, as is usually the case, the woman helps in supporting her family”); see generally

Government Function, supra note 6, at 32–33. 117 RODRIK, supra note 47, at 205 (discussing how “trade adjustment assistance” was cut during

the Regan era despite the United States “open[in]g itself up to imports from Mexico, China, and

other developing nations more extensively”); see also Mark Muro and Joseph Parilla, Maladjusted:

It’s Time to Reimagine Economic ‘Adjustment’ Programs, BROOKINGS INST. (Jan. 10, 2017),

https://www.brookings.edu/blog/the-avenue/2017/01/10/maladjusted-its-time-to-reimagine-

economic-adjustment-programs/ (showing that the United States spent less (0.11 percent of GDP)

on active labor market adjustment programs in 2014 than Japan (0.17 percent), Canada (0.22

percent), Korea (0.45 percent), Germany (0.66 percent), or France (0.99 percent)); Why They’re

Wrong, THE ECONOMIST (Oct. 1, 2016), https://www.economist.com/news/leaders/21707926-

globalisations-critics-say-it-benefits-only-elite-fact-less-open-world-would-hurt (“America

spends a paltry 0.1% of its GDP, one-sixth of the rich country average, on policies to retrain

workers and help them find new jobs.”). 118 Government Function, supra note 6, at 32–33 (noting that free governments have intervened in

economic operations to assist individuals entering new fields of production; provide indirect

assistance, such as subsidies and temporary monopolies, to stimulate employment; provide direct

financial assistance; facilitate nonpublic and nonprivate operations, such as public infrastructure;

and to parallel certain operations of private enterprises to ensure continued production, even when

private enterprises are unable or unwilling to continue their operations). 119 Welfare of the Masses, supra note 6, at 469 (stating that education is “the most profitable

expenditure possible. Even in cold economics the returns from education are enormous”); The

Quest for Individual Security, supra note 6, at 406 (arguing that “part of the problem of

security . . . relates to the education of children,” that no one feels secure unless their child has

62

insecurity has been felt among people with the least education. Widening the

availability of relevant training and educational opportunities relevant to succeeding

in the evolving economy is also something of universal appeal.120

Government investment to create jobs and, while doing so, build skills, would

be an obvious Berle move,121 as you cannot transition workers to new and better jobs

hopes for a better future, and that it is difficult to make college education affordable when it could

cost a child…GASP…$2,600 a year to go to Harvard!). 120 See PEW RESEARCH CTR., The State of American Jobs (Oct. 6, 2016),

http://www.pewsocialtrends.org/2016/10/06/the-state-of-american-jobs/ (“More than half (54%)

of adults in the labor force say it will be essential for them to get training and develop new skills

throughout their work life in order to keep up with changes in the workplace. And 35% of workers,

including about three-in-ten (27%) adults with at least a bachelor’s degree, say they don’t have the

education and training they need to get ahead at work.”); see also GALLUP, In Depth Topics A to

Z: Education, http://news.gallup.com/poll/1612/education.aspx (citing a 2013 poll in which 50%

of respondents stated that obtaining knowledge and skills was more important than obtaining a

degree from a well-respected university for young people to succeed); CTR. FOR AM. PROGRESS,

BETTER TRAINING AND BETTER JOBS 1 (2018), https://www.americanprogress.

org/issues/economy/reports/2018/02/22/447115/better-training-better-jobs/ (“Workers also have

little ability to ensure that the training they receive will lead to a good job, as they have minimal

input into most training programs and limited power to improve the quality of the jobs for which

they train. Exacerbating this is the fact that a smaller share of workers are members of unions

today than several decades ago. In the current economy, workers are increasingly on their own,

without sufficient tools and the structures they need to succeed.”); see generally Crain, supra note

24, at 95 (discussing labor policies in Scandinavia, “where governments support workers

directly—through wage subsidies, retraining sabbaticals, and temporary public jobs”). 121 Berle spent his short stint as an official New Dealer working in the Reconstruction Finance

Administration to stimulate government works projects to jump start the economy and create

needed jobs for the unemployed. See 1969 Interview with Berle, supra note 5, at 25.

63

if they do not exist.122 The huge infrastructure gap in the U.S. and EU,123 if

addressed, presents a large opportunity to employ domestic workers (for an obvious

122 Lawrence Mishel, Tired of Economists’ Misdirection on Globalization, WORKING ECONOMICS

BLOG (Apr. 26, 2016, 12:42 PM), https://www.epi.org/blog/tired-of-economists-misdirection-on-

globalization/ (“You can’t adjust a dislocated worker to an equivalent job if good jobs are not

being created and wages for the majority are being suppressed. . . . If free-traders had actually

cared about the working class they could have supported a full range of policies to support robust

wage growth: full employment, collective bargaining, high labor standards, a robust minimum

wage, and so on. They could have strengthened social insurance. . . . But they didn’t.”); Matthew

Yglesias, American Airlines Gave Its Workers a Raise. Wall Street Freaked Out, VOX (Apr. 29,

2017), https://www.vox.com/new-money/2017/4/29/15471634/american-airlines-raise (“The vast

majority of Americans earn a living supplying services to other Americans, so when wages don’t

rise we struggle to find economic opportunities.”). 123 THE ASPEN INST., AMERICAN PROSPERITY PROJECT: A NONPARTISAN FRAMEWORK FOR LONG-

TERM INVESTMENT 2 (2016), https://assets.aspeninstitute.org/content/uploads/2017/01/American-

Prosperity-Project_Policy-Framework_FINAL-1.3.17.pdf (“The U.S. now ranks 25th in

infrastructure quality per the National Association of Manufacturers.”); MCKINSEY GLOBAL INST.,

BRIDGING GLOBAL INFRASTRUCTURE GAPS 4 (2016),

https://www.mckinsey.com/~/media/McKinsey/Industries/Capital%20Projects%20and%20Infras

tructure/Our%20Insights/Bridging%20global%20infrastructure%20gaps/Bridging-Global-

Infrastructure-Gaps-Full-report-June-2016.ashx (“China spends more on economic infrastructure

annually than North America and Western Europe combined.”); AM. SOC’Y OF CIVIL ENG’RS, 2017

INFRASTRUCTURE GRADES, https://www.infrastructurereportcard.org/wp-

content/uploads/2016/10/Grades-Chart.png (grading our overall national infrastructure D+; rails

B; ports and bridges C+; energy D+; aviation, dams, and roads D; and transit D-); James McBride,

The State of U.S. Infrastructure, COUNCIL ON FOREIGN RELATIONS 6–7 (Jan. 12, 2018),

https://www.cfr.org/backgrounder/state-us-infrastructure (“On average, European countries spend

the equivalent of 5 percent of GDP on building and maintaining their infrastructure, while the

United States spends 2.4 percent. Other countries, including Australia, Canada, France, and the

United Kingdom have also developed national infrastructure frameworks that allow the central

government to direct and prioritize projects in a way that the United States’ more decentralized

system has struggled to do.”); NAT’L ASS’N OF MFRS., CATCHING UP: GREATER FOCUS NEEDED TO

ACHIEVE A MORE COMPETITIVE INFRASTRUCTURE 13 (2014),

http://www.nam.org/Issues/Infrastructure/Surface-Infrastructure/Infrastructure-Full-Report-

2014.pdf (“In current dollar terms, infrastructure investment now is about 1.5 percent of GDP

compared to a peak of nearly 3 percent in the late 1960s. Public infrastructure investment is now

about 1 percent of potential GDP compared to close to 2 percent at the peak, and private

infrastructure investment now is about 0.5 percent of GDP compared to previous rates of close to

1 percent.”).

64

geographic reason) and to train them in new skills to meet the demand.124 As

important, by making sure that infrastructure refurbishment is done in an

environmentally responsible manner, these investments provide an opportunity for

the U.S. and other nations to address climate change, and develop new technologies

and industries that should create jobs.125

124 Meyer, supra note 53, at 1018 (“[I]nfrastructure investments can drive economic growth by

creating employment and creating the platform for further investment in businesses.”) (internal

citations omitted); THE ASPEN INST., supra note 123, at 2 (“Quality infrastructure creates a better

business environment: it enhances safety, productivity, and quality of life for citizens; and it

supports good jobs.”). A failure to improve our infrastructure will impose high costs. AM. SOC’Y

OF CIVIL ENG’RS, FAILURE TO ACT: CLOSING THE INFRASTRUCTURE INVESTMENT GAP FOR

AMERICA’S ECONOMIC FUTURE 26 (2016), https://www.infrastructurereportcard.org/wp-

content/uploads/2016/05/ASCE-Failure-to-Act-Report-for-Web-5.23.16.pdf (“If none of these

infrastructure gaps are addressed, the U.S. is expected to lose nearly $4 trillion in GDP by 2025

and $18 trillion in GDP over the 25 year period of 2016 to 2040, averaging over $700 billion per

year. From 2016 to 2025, each household will lose almost $3,400 each year in disposable income

due to infrastructure deficiencies; and if not addressed, the loss will grow to an average of $5,100

annually from 2026 to 2040. From 2016 to 2025, households will average a cumulative loss of

$34,000 in disposable income; and if infrastructure deficiencies are not addressed, households will

average an additional cumulative loss of $76,000 in discretionary income from the years 2026 to

2040. Even though net job impacts are counted in millions of jobs lost from the U.S. due to

insufficient infrastructure investment, overall economic impacts in dollars lost in the economy

measured by business sales and GDP will be even more dramatic than impacts on overall number

of jobs. Job losses in part will be mitigated by more people working for less money. Many of

these jobs will be in replacement for technology-based and education-driven industries that are the

basis of long-term economic development.”); id. (estimating that approximately 2.5 million jobs

will be lost in the economy in 2025, and 5.8 million lost in 2040, if the failure to invest in the

national infrastructure persists). For a discussion of how corporations could play a role in funding

infrastructure projects to create jobs, see PETER GEORGESCU, CAPITALISTS ARISE 85 (2017)

(suggesting that Congress encourage repatriation of corporate dollars held overseas with a low tax

rate and then set those tax proceeds aside for infrastructure projects). 125 Derrick Z. Jackson, Catching a Breeze, AM. PROSPECT (Apr. 20, 2018),

http://prospect.org/article/catching-breeze (citing data that wind energy jobs in the US now exceed

jobs in the coal industry, and citing evidence of potential for large growth in clean energy

employment); Steven Greenhouse, Mobility and Social Justice: Connecting Public Transit to

Great Manufacturing Jobs, AM. PROSPECT (Apr. 9, 2018), http://prospect.org/article/connecting-

public-transit-great-manufacturing-jobs (discussing the positive effects investments in public

transportation has on domestic employment in manufacturing).

65

Berle was sensitive to all avenues by which economic power might be

exploited, and to the interrelationship of them. It would not be lost on him that many

of the industries that cut environmental corners also treat their workers poorly and

expose them to unsafe working conditions. And climate change poses the greatest

threat to those in the world who are the worst off.126 By embracing and spreading

enforceable environmental obligations as a prerequisite to access to international

markets, and using pressures from both international, domestic and non-government

sources (including institutional investors) to encourage means of production that are

environmentally responsible, the environment and workers themselves stand to

benefit.127 And again, this is an area—like support for workers’ rights—that has

126 WORLD BANK GROUP, SHOCK WAVES: MANAGING THE IMPACTS OF CLIMATE CHANGE ON

POVERTY 4 (2016), https://openknowledge.worldbank.org/bitstream/handle/10986/22787/

9781464806735.pdf (“[P]oor people (i) are more often affected by the[] negative shocks or trends

[associated with climate change] (they are more exposed); (ii) lose more when affected, relative to

their income or wealth (they are more vulnerable); and (iii) receive less support from family,

friends, and community, and have less access to financial tools or social safety nets to help prevent,

prepare for, and manage impacts.”); id. at xi (“[C]limate change would likely spark higher

agricultural prices and could threaten food security in poorer regions such as Sub Saharan Africa

and South Asia. And in most countries where we have data, poor urban households are more

exposed to floods than the average urban population. Climate change also will magnify many

threats to health, as poor people are more susceptible to climate-related diseases such as malaria

and diarrhea.”). 127 A distinguished scholar argues that labor and environmental concerns have to be central to any

fair approach to globalization. RODRIK, supra note 47, at 229 (“Trade experts have long been wary

of opening up the WTO regime to questions about labor and environmental standards or human

rights, fearing the slippery slope of protectionism. But it is becoming increasingly clear that failure

to take these issues on board does greater damage.”). But, he argues that instead of embedding

requirements for labor and environmental standards in core trade agreements, individual nations

should be permitted to impose tariffs against nations that violate fair labor and environmental

standards. Id. at 231 (“[W]e should broaden [the fair trade concept] as it exists in trade law, to

include social dumping. Just as countries can impose duties on goods that are sold below costs,

66

strong international support.128 To the extent that the U.S. embraces a muscular,

confident approach to climate and economic change, by setting aggressive targets

for auto vehicle mileage and other analogous goals, the full power of American

capital and ingenuity could be brought to bear for the twin purposes of tackling

climate change and fueling new opportunities for American workers.

But, ugh, would Berle think we have the “Means” to accomplish these goals?

As a realist, Berle would no doubt find the current political reality dispiriting, but

also as presenting important pockets of opportunity.

they should be allowed to restrict imports that demonstrably threaten damage to domestic

regulatory arrangements.”). A Berlean critique might argue that part of the reason for downward

pressure on wages and environmental standards has been the ability of transnational corporations

to engage in regulatory arbitrage as they are able to escape regulation by flight. I believe Rodrik’s

argument that there should be “social dumping” is correct, but that it is essential and not

inconsistent with that argument, for there to be convergence on some essential, bottom line

principles that involve widely shared values, and to embed them in trade and other agreements so

that businesses cannot escape compliance, and so that a firm floor is set to ensure that key values

that social democrats like Rodrik embrace are not eroded. 128 Simon J. Evenett, Trade Policy: Time for a Rethink?, EURACTIV (Oct. 16, 2007),

https://www.euractiv.com/section/science-policymaking/opinion/trade-policy-time-for-a-rethink/

(discussing how Europeans have thus far failed to secure “labour and environmental standards”

that they “value” through the WTO, and arguing that they be pursued instead by “alternative

combinations of formal international obligations and incentives, citing budget aids as an

example.”); STERN SCH. OF BUS. & NEW YORK UNIV., THE INFRASTRUCTURE FINANCE CHALLENGE

28–29 (Ingo Walter ed., 2016) (noting that “[s]ustainable and green infrastructure aimed at solving

environmental and social challenges is a growing priority” and observing that the UN’s Sustainable

Development Goals, which “covers broad objectives, such as reducing carbon and other

environmental impacts, as well as support for new technologies such as electric self-driving

vehicles and transportation grids in urban centers,” “include criteria on clean energy,

infrastructure, sustainable cities, and climate action that will require a new 21st century approach

to infrastructure.”); COUNCIL ON FOREIGN RELATIONS, supra note 45, at 6 (reporting the results of

a poll of seventeen countries indicating that, on average, 84% of respondents, 95% of respondents

from Great Britain, and 93% of respondents from the United States think that countries that are

party to an international trade agreement should be required to maintain minimum standards for

protection of the environment).

67

For starters, in the long run, the connection between right wing

authoritarianism and working people’s economic interests is so tenuous,129 that an

internationalism that kept front and center the need for economic security for

working people and the middle class should have a basis for long-term success.130

That is especially so when the costs of retrenchment to working people would be

huge, because as many or more owe their jobs to international commerce as are

threatened by it.

129 See, e.g., Jason Margolis, Trump’s Anti-Globalization Messages Resonates in ‘Forgotten’

Pennsylvania Town, PRI’S THE WORLD (July 20, 2016, 4:30 PM),

https://www.pri.org/stories/2016-07-20/forgotten-world-trumps-anti-globalization-message-

resonates-struggling (describing the experience of Lou Mavrakis, mayor of Monessen,

Pennsylvania, a town whose population declined from 18,000 in 1960 to 7,500 in 2015 and whose

major steel mill closed in the 1980s, who feels his town has been “left behind in the age of

globalization” and, as a result, despite being a lifelong Democrat governing a “Democratic

bastion” where support for a Republican president was unheard of, indicated that he would

“‘probably vote for Trump. . . . Whatever you can do for me, you’ve got my vote. If you can’t do

nothing for me, the hell with you. I’m telling it like it is.’”). 130 See generally Drawbridges Up, supra note 92 (finding that the success of “drawbridge-up”

political parties is driven by economic dislocation, including among “mid- and less-skilled workers

in rich countries [who] feel hard-pressed,” and associate immigration or trade for their absence;

and demographic change because although “[l]arge-scale immigration has brought cultural change

that some natives welcome—ethnic food, vibrant city centres . . . others find [it] unsettling . . .

[and] are especially likely to object if the character of their community changes very rapidly,”

which “does not make them racist,” but lays a foundation for an “authoritarian counter-reaction”

where a country experiences “‘historically high levels of immigration from countries with very

different moralities, and without a strong and successful assimilationist programme’”) (internal

citations omitted).

68

Not only that, in general, the poll data shows supports for strengthened

international ties and trade,131 and that support is greater among younger people.132

An internationalism that focuses on the best interests of all can build on this support,

and brings back into the fold working people disenchanted with the Davos Democrat

indifference to their feelings of insecurity.

Even in the wreckage of Brexit, one can see the potential for new angles of

approach. Precisely because Brexit makes no sense,133 would there be a chance for

131 See COUNCIL ON FOREIGN RELATIONS, supra note 45, at 7–8(summarizing the results of a poll

that indicate that 74% of respondents in China, Japan, and South Korea favor a free trade

agreement in the United States, and the results of another poll that indicate that on average, 67%

of respondents in six European countries—Germany, France, Italy, Poland, Slovakia, the United

Kingdom—and the United States favored a transatlantic economic initiative that would facilitate

trade and investment and deepen economic ties between the United States and the European

Union); id. at 2 (reporting that twenty-one nations said trade’s effect on their country’s economy

was good and finding “[t]he highest levels of enthusiasm [] in Peru (92 percent), China (88

percent), Israel (88 percent), and Azerbaijan and Kenya (both 85 percent). The least enthusiasm

for trade was found in Egypt (49 percent) and the United States (54 percent)); id. (reporting that,

on average, 66 percent of respondents said that trade had a good effect on companies in their

country, 65 percent of respondents said it had a good effect on consumers such as themselves, and

59 percent said it had a good effect on job creation in their country). 132 See Jones, supra note 56 (reporting that among Americans, “[a]s has been the case in the past,

free trade agreements are viewed far more positively by younger people than older adults.

Majorities of those under 30 (67%) and those ages 30 to 49 (58%) say free trade agreements have

been good for the country. Among those 50 and older, just 41% say free trade agreements have

been a good thing. . . . By more than two-to-one (60% vs. 26%), those younger than 30 say they

have been helped more than hurt financially by free trade agreements. Those in older age groups

are more divided in their views of the personal impact of free trade agreements.”); EUR. COMM’N,

supra note 56, at 23 (reporting that, among EU citizens, 69% of younger survey respondents view

globalization as positive, as compared to 44% of survey respondents age 55 or older, and that 74%

of student respondents consider globalization positive, as compared to 42% of retired respondents). 133 The U.K. government’s inability to formulate a coherent exit strategy illustrates this, as the

Tory government basically desires to continue to have what it wants from its current status as an

EU member, while being able to say it left. See DEPARTMENT FOR EXITING THE EUROPEAN UNION,

THE UNITED KINGDOM’S EXIT FROM AND NEW PARTNERSHIP WITH THE EUROPEAN UNION, 2017,

Cm. 9417, at 3–6 (outlining the U.K.’s priorities in negotiating a partnership with the EU that will

“fulfill[] the democratic will of the people” and noting, as to the negotiations, that “[t]he focus will

69

the U.S. to reinvigorate the special relationship with the U.K., and forge trade

agreements with it and the Commonwealth, or even more broadly, a U.S.-

Commonwealth-EU trade accord committing the entire bloc to full support of labor

rights, environmental responsibility, and sustainable approaches to corporate

governance and economic growth? Although Britain is literally an island, it cannot

operate as such, and the ties that Churchill called for in his famous Fulton speech to

bind the English-speaking peoples will be even more important if Brexit actually

ensues.

And an ironic tool has emerged. Berle would likely be dismayed at the extent

to which the reemerging power of stockholders—in the form of institutional

investors wielding the clout not of their own capital, but of others, largely that of

not be about removing existing barriers or questioning certain protections but about ensuring new

barriers do not arise”); Chris Bickerton, The Brexit Iceberg, in BREXIT AND BEYOND: RETHINKING

THE FUTURES OF EUROPE 132, 136–37 (Benjamin Martill & Uta Staiger eds., 2018) (“[T]here has

been a great reluctance to accept that Brexit means the UK is ‘going it alone’ in any meaningful

way. Nationalist histories of the past—including that of the UK—have made much of the ability

to ‘stand alone’ but in the UK’s case even confident Brexiters have sought the comfort of wider

communities such as the ‘Anglosphere’ or the Commonwealth . . . . The referendum campaign

itself never addressed directly the issue of the UK’s status as an outsider. . . . Instead, there was an

extensive debate about which ‘model’ the UK would adopt. Critics of this discussion talked of a

‘bespoke arrangement’ for the UK, which had comforting echoes of receiving special treatment

and of not being left out in the cold. This refusal to consider Brexit as the state transformational

challenge that it is continues into the post-referendum period.”); see also Laura Hughes,

Conservative Party Factions Attack Theresa May’s Brexit Options, FIN. TIMES (May 13, 2018),

https://www.ft.com/content/120c0f18-56a7-11e8-bdb7-f6677d2e1ce8 (“Under the customs

partnership that Mrs. May favours, Britain would in theory have frictionless borders with the EU

. . . . The UK would mirror EU customs rules at its ports, collecting tariffs for the bloc while

maintaining the right to set Britain’s own duties and trade policy.”).

70

working people—has fueled an erosion in corporate social responsibility,134

compromised the clout of unions and working people in general,135 created pressures

134 Berle viewed big business as operating under a social contract. See Adolf A. Berle, Jr., A New

Look at Management Responsibility, 1 HUMAN RESOURCE MANAGEMENT 2 (1962) [hereinafter A

New Look at Management Responsibility] (“[B]ig business, in the American system, exists and

derives its right to exist under, and only under, a tacit social contract. This social contract requires

management of big business (let us say, arbitrarily, the 1,500 largest corporations in the United

States) to assume certain responsibilities. Assumption and fulfillment of them entitles big business

to the privileges it receives from the State, and to acquiescence to their existence by the economic

community they affect and serve. . . . [T]hey are . . . required, while seeking profit, to assure that

their work in both these fields shall contribute to economic stability, to maintaining continuous

and adequate supply, to providing continuity and stability of employment, and to providing

technical advance in their industry. Seeking these results modifies, pro tanto, the old theory that

the whole duty of management was satisfied by maximizing profits. Put differently, the right to

make and retain profits is conditioned on working toward and, let us hope, attaining these ends.”).

Other writings of Berle making this point include FREE SOCIETY, supra note 83; and Adolf A.

Berle, Jr., The Duties and Obligations of American Citizenship, 10 DEPT. OF STATE BULLETIN 278

(1944). 135 For example, Berle would find it astonishing to see stock market analysts react to American

Airlines’ decision to give its employees a raise to close the compensation gap that existed between

it and its key competitors. Yglesias, supra note 122 (“‘This is frustrating. Labor is being paid first

again,’ wrote Citi analysts Kevin Crissey in a widely circulated note. ‘Shareholders get

leftovers.’”); id. (“‘We are troubled by AAL’s [American Airlines’] wealth transfer of nearly $1

billion to its labor groups,’ [JP Morgan’s Jamie Baker] wrote, suggesting that the move was not

just contestable as a matter of business strategy, but somehow obviously illegitimate.”); see also

Maureen Conway & Mark G. Popovich, Paying Workers Better Shouldn’t Be Bad News on Wall

Street, ASPEN INST. BLOG (May 12, 2017), https://www.aspeninstitute.org/blog-posts/paying-

workers-better-shouldnt-bad-news-wall-street/ (“[T]he pay increase was modest. The raises were

for 5 percent to 8 percent for flight attendants and pilots respectively, and AAL offered the

adjustment because salary levels had fallen behind their peers. Had they not raised salaries, AAL

executives would likely have faced turnover costs. Plus, the salary increases were an affordable

commitment, given the company’s budget. The raises, therefore, entail a mere 0.57 percent of

AAL’s operating expenses, which reached $40.18 billion in 2016. Should Wall Street analysts

and investors put maximizing profits above keeping a commitment to the working people that

power the enterprise?”). To have corporations subject to this sort of pressure to be callous and

short-sighted undermines the social contract to others that Berle viewed as governing the exercise

of corporate power.

71

to diminish externality regulation, and contributed to the huge increase in

inequality.136

But, he would also see promise in the emergence of representatives of passive,

long-term investors as the key power players among stockholders.137 If these

136 E.g., Leo E. Strine, Jr., Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on

Hedge Fund Activism and Our Strange Corporate Governance System 126 YALE L. J. 1870, 1941–

42 (2017) (“[P]ost-activist intervention gains that result from reducing labor rents might well be

considered yet another deepening of income inequality that reduces the wealth of the many to

benefit the few.”) (citing Alon Brav et al., The Real Effects of Hedge Fund Activism: Productivity,

Asset Allocation, and Labor Outcomes, 28 REV. FIN. STUD. 2723, 2753 (2015) (finding that on

average, workers at target firms experience stagnant wages and increased productivity, resulting

in reduced productivity-adjusted wages); and citing Lawrence Mishel et al., Wage Stagnation in

Nine Charts, ECON. POL’Y INST. 3 fig.1 (Jan. 6, 2015), https://www.epi.org/files/2013/wage-

stagnation-in-nine-charts.pdf (showing that as of 2007, the average income of the middle 60% of

American households was $17,867 less than what it would have been had inequality not widened);

John C. Coffee, Jr. et al., Activist Directors and Agency Costs: What Happens When an Activist

Director Goes on the Board? 9–10 & n.21 (Columbia Bus. Sch. Research Paper No. 18-15, 2018),

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3100995 (“[S]ome evidence suggests that

shareholder pressure, organized and directed by activist hedge funds, may cause the corporation

to act in a more risk-accepting manner and contrary to broadly accepted public policies,” for

example, by “compelling some energy companies to use ‘dirty’ energy and shelve projects to shift

to ‘clean’ energy” (citations omitted)); Yvan Allaire & Francois Dauphin, The Game of ‘Activist’

Hedge Funds: Cui Bono?, 13 INT’L J. OF DISCLOSURE AND GOVERNANCE 279, 290 & fig.5 (2016)

(firms targeted by activist hedge funds saw a 2.5% decline in their number of employees while

companies in the control group saw a 15% increase in their number of employees during the same

time period); see also RODRIK, supra note 47, at 209 (2018) (discussing the lack of clout labor,

environmental, and other groups have to protection under trade laws as opposed to for-profit

industries). 137 Lucian A. Bebchuk, Alma Cohen & Scott Hirst, The Agency Problems of Institutional Investors,

31 J. ECON. PERS. 89, 93 (2017) (showing that for the largest U.S. corporations, the five largest

institutional investors owned over 20% of the shares, and the largest 20 owned one-third); Dorothy

Lund, The Case Against Passive Shareholder Voting, 43 J. CORP. L. 17 (forthcoming 2018)

(showing that Blackrock, Vanguard and State Street—the leading index funds—are the largest

stockholders in 88% of the S&P 500 in 2015, up from 25% in 2000); Jill Fisch, Assaf Hamdani &

Steven Davidoff Solomon, Passive Investors 1 (Apr. 13, 2018) (unpublished manuscript) (on file

with author) (“Although the extent to which index funds will continue to grow remains unclear,

some estimates predict that by 2024 they will hold over 50% of the market.” (citing Trevor

Hunnicut, Index Funds to Surpass Active Fund Assets in the U.S. by 2024: Moody’s, REUTERS

(Dec. 2, 2017), https://www.reuters.com/article/us-funds-passive/index-funds-to-surpass-active-

fund-assets-in-u-s-by-2024-moodys-idUSKBN15H1PN)).

72

institutional investors can align their investing and voting strategies with the

interests of the forced capitalists whose money they hold—forced capitalists138

whose long-term wealth depends more on whether they can get and keep a good

job—then that would help to reinstate the sensible framework for corporate societal

accountability that Berle felt had emerged from the New Deal/Social Democratic

approach to capitalism. This framework aligns the interests of stockholders as equity

investors and the interests of workers by focusing corporate goals on sustainable,

responsible long-term growth, through business practices that respect societal norms

and that do not externalize costs.139

138 Leo E. Strine, Jr., Toward Common Sense and Common Ground? Reflections on the Shared

Interests of Managers and Labor in a More Rational System of Corporate Governance, 33 J. CORP.

L. 1, 4 (2007) (“[M]ost ordinary Americans have little choice but to invest in the market. They

are in essence ‘forced capitalists,’ even though they continue to depend for their economic security

on their ability to sell their labor and to have access to quality jobs. . . . For powerful reasons, this

class of investors invests in the market primarily through intermediaries. It is these intermediaries,

and not the forced capitalists, who determine how the capital of these investors is put to work and

how the mountain of shares owned for their benefit is used to influence the management of public

corporations.”). 139 Examples of promising efforts to have institutional investors focus on supporting corporate

governance policies that promote sustainable, responsible long-term growth that is in the interests

of the working people whose capital they control, include: Martin Lipton et al., The New

Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations

and Investors to Achieve Sustainable Long-Term Investment and Growth, (International Business

Council of the World Economic Forum) (Sept. 2, 2016); Action Plan: Financing Sustainable

Growth, EUR. PARL. DOC. 8–9 (COM 52018DC0097) (2018) (“Subject to the outcome of its impact

assessment, the Commission will table a legislative proposal to clarify institutional investors’ and

asset managers’ duties in relation to sustainability considerations by Q2 2018. The proposal will

aim to (i) explicitly require institutional investors and asset managers to integrate sustainability

considerations in the investment decision-making process and (ii) increase transparency, towards

end-investors on how they integrate such sustainability factors in their investment decisions in

particular as concerns their exposure to sustainability risks.”); Annual Letter from Laurence D.

Fink, Chairman, Blackrock (Feb. 1, 2016), https://www.blackrock.com/corporate/literature/press-

release/2016-larry-fink-ceo-letter.pdf. See also RAJ M. DESAI, HOMI KHARAS & MAGDI AMIN,

73

Put simply, if the separation between ownership and ownership140 is addressed

to make sure that institutional investors faithfully represent those whose capital they

hold, the reversal of Berle’s iconic separation of ownership and control can be a

COMBINING GOOD BUSINESS AND GOOD DEVELOPMENT: EVIDENCE FROM IFC OPERATIONS,

BROOKINGS INST. 4–5 (2017), https://www.brookings.edu/wp-

content/uploads/2017/05/combining-good-business-development.pdf (observing that, at least

among publicly traded companies or investment funds in the US or high-income OECD countries,

ESG is being integrated into corporate operations, rather than separated into corporate social

responsibility departments, supporting “a new narrative that good sustainability practices can

improve the reputation of a company—as well as increase sales, enhance employee loyalty, and

attract better personnel . . . .”); id. (“One assessment finds that the pooled internal rate of return

for investments made by ‘impact’ private equity funds exceeds the small-cap market index. Private

equity and venture capital funds with “impact missions” produce higher or equivalent returns as

traditional funds. Meta-analyses show that social and (to a lesser extent) environmental

responsibility pays off. A review examining some 159 empirical analyses finds that the majority

show a positive relationship between sustainability and financial performance (63 percent), while

15 percent of studies report a negative relationship, and 22 percent report a neutral or mixed

relationship. A meta-analysis of over 2,000 studies shows a strong business case for ESG

investments, with 90 percent of these studies finding a positive relationship between environmental

sustainability and financial performance.”) (internal citations omitted); AFL-CIO OFF. OF INV.,

AFL-CIO KEY VOTES SURVEY: HOW INVESTMENT MANAGERS VOTED IN THE 2017 PROXY SEASON

1–4 (2017), https://aflcio.org/sites/default/files/2018-02/2017%20AFL-

CIO%20Key%20Votes%20Survey%20Report%20%281%29.pdf (noting that the proposal

selected for the survey include the categories of “increasing management accountability and

advancing a worker-owner view of value,” and that the AFL-CIO’s Proxy Voting Guidelines

support, among other measures, “measures that encourage companies to respect human and labor

rights, and mechanisms aimed at promoting disclosure and sustainable business practices.”). 140 See Strine, supra note 138, at 6–7 (“What I mean by this is that the equity of public corporations

is often owned, not by the end-user investors, but by another form of agency, a mutual fund, or

other institutional investor. It is these intermediaries who vote corporate stock and apply pressure

to public company operating boards. I daresay that more American stockholders own equity in

Fidelity- and Vanguard-controlled mutual funds than own stock in Microsoft or GE.”); Leo E.

Strine, Jr., Why Excessive Risk-Taking Is Not Unexpected, N.Y. TIMES DEALBOOK (Oct. 5, 2009),

https://dealbook.nytimes.com/2009/10/05/dealbook-dialogue-leo-strine/; Leo E. Strine, Jr., One

Fundamental Corporate Governance Question We Face: Can Corporations Be Managed for the

Long Term Unless Their Powerful Electorates Also Act and Think Long Term?, 66 BUS. LAW. 1

(2010); Leo E. Strine, Jr., Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the

Dueling Ideological Mythologists of Corporate Law, 114 COLUM. L. REV. 449 (2014); Matteo

Tonello, The Separation of Ownership from Ownership, HARV. LAW SCH. F. ON CORP. GOV. &

FIN. REG. (Nov. 25, 2013), https://corpgov.law.harvard.edu/2013/11/25/the-separation-of-

ownership-from-ownership/.

74

positive force to help make large corporations and the economy work better for the

many.141

These efforts are similar in character to other initiatives that hold the promise

for later, more universal convergence of principles relevant to a global New Deal.

The willingness of strategically vital and economically powerful states like

California to embrace efforts to address climate change,142 and to embrace stronger

141 Berle foresaw that workers would increasingly have their futures dependent on the growth in

equity markets sufficient to fund their pensions, and that although the workers would have their

money at stake, the pension fund, not they, would have the right to vote and control the stock:

The present $30 billion in the pension trusts of course is doomed to increase. These

are compulsory savings and the funds must continue to accumulate. . . . [I]f the

pension trusts continue to take the good equities as they have been doing, they may

well have the prevailing control-stockholding position and the capacity to make it

absolute. They will have, say, 20 per cent to 30 per cent of the good equity stocks

and the capacity to increase that to 40 per cent or 50 per cent (45 per cent for

practical purposes is a majority at any big stockholders’ meeting).

With the rise of the pension trusts into the “passive-receptive” end of the

corporation structure the old “passive-receptive” stockholder is gradually

disappearing. At best he is, shall we say, a pensionnaire. The last vestige of his

power to legitimate a management by a vote is in the hands of the pension trustees.

He has an expectation arising out of the fact that he may have performed a certain

number of years of acceptable work and fulfilled a certain number of other

conditions. But does he have any property right in the pension trust? The courts

say no. The power—what is left of it—lies in the trustees, or in those insurance

companies which administer trusts.

FREE SOCIETY, supra note 83, at 12; see also Frank Partnoy, Everything Old is New Again: Berle

and Corporation Finance (1928), Berle X: Berle and His World (May 2008) (also noting that Berle

foresaw this phenomenon). What Berle said of pension funds is relevant to those funds’ current

analogue—the 401K funds in which American forced capitalists must place their funds to invest

for retirement. 142 See Barry G. Rabe, Carbon Pricing Durability and the Case of California, BROOKINGS INST.

(Aug. 30, 2017), https://www.brookings.edu/blog/fixgov/2017/08/30/carbon-pricing-durability-

and-the-case-of-california/ (describing California’s 2012 implementation of a cap-and-trade

program and noting that “[s]tate emissions in the sectors the program addresses have continued to

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protections for workers,143 can weaken the negative effects of national nativism and

provide a sound basis for future national and international action.144 Within

decline, although other policies have also played a role. And the California economy has

rebounded nicely from recession during this very period. Indeed, who would have thought that

California operating cap-and-trade would coincide with unemployment rates that have consistently

fallen below those of America’s other state super-power: fossil fuel-producing behemoth Texas?

It is exactly the opposite of what California Jobs Initiative backers projected in a 2010 ballot

proposition battle, when they insisted that cap-and-trade had to be frozen if the state was to be

spared devastating job losses and prolonged economic stagnation.”); Jeremy Carl & David Fedor,

Tracking Global Carbon Revenues: A Survey of Carbon Taxes Versus Cap-and-Trade in the Real

World, 96 ENERGY POL’Y 50, 62–65 (2016) (reporting that California’s AB 32 program generates

substantial revenue for the state); see also Hiroko Tabuchi & Henry Fountain, Bucking Trump,

These Cities, States and Companies Commit to Paris Accord, N.Y. TIMES (June 1, 2017),

https://www.nytimes.com/2017/06/01/climate/american-cities-climate-standards.html (describing

actions of “30 mayors, three governors, more than 80 university presidents and more than 100

businesses” cooperating to abide by the Paris climate accord that President Trump disavowed). 143 See generally AFL-CIO, FIGHTING FOR A BETTER LIFE: HOW WORKING PEOPLE ACROSS

AMERICA ARE ORGANIZING TO RAISE WAGES AND IMPROVE WORK 7–8 (2016),

https://aflcio.org/sites/default/files/2017-03/1614_WageSummitReport.pdf (summarizing state-

level efforts to secure legislation establishing a minimum wage, improving paid sick day policies,

requiring equal pay, requiring “more human-friendly” work schedules, and increasing pay for

tipped workers). 144 Rob Jordan, Stanford Experts Weigh in on the Impact and Influence of California’s Ambitious

Global Warming Legislation, STAN. NEWS (Sept. 1, 2016), https://news.stanford.edu/

2016/09/01/impact-influence-californias-global-warming-legislation/ (“California’s leadership on

addressing climate change has played a strong role in building recognition for the importance of

actors other than national governments and for structuring the Paris Agreement as a way to

embrace collaborations among nations, states, communities and companies” (quoting Chris Field,

the Melvin and Joan Lane Professor for Interdisciplinary Environmental Studies and professor in

the School of Earth, Energy & Environmental Sciences at Stanford)); Coral Davenport & Adam

Nagourney, Fighting Trump on Climate, California Becomes a Global Force, N.Y. TIMES (May

23, 2017), https://www.nytimes.com/2017/05/23/us/california-engages-world-and-fights-

washington-on-climate-change.html (“As President Trump moves to reverse the Obama

administration’s policies on climate change, California is emerging as the nation’s de facto

negotiator with the world on the environment. The state is pushing back on everything from White

House efforts to roll back pollution rules on tailpipes and smokestacks, to plans to withdraw or

weaken the United States’ commitments under the Paris climate change accord.”); see Moshe Z.

Marvit, The Way Forward for Labor is through the States, AM. PROSPECT (Sept. 1, 2017),

http://prospect.org/article/way-forward-labor-through-states (“In most . . . areas of worker

protection—from minimum wage to antidiscrimination laws—the federal government has set the

floor under which states and cities may not go, but they can and often do raise the ceiling by

increasing state or local minimum wage or including additional protected categories such as sexual

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corporate law itself, the emergence of a form of corporation that puts some real, if

tempered, binding legal and market force behind principles of social responsibility,

the Benefit Corporation, can, if embraced by the center of the plate investors now

espousing ESG and other buzzwords for doing things the right way, temper short-

termism and externality risk in a useful way.145 The Benefit Corporation model also

has international utility, as its principles are analogous to those embraced by many

EU and OECD company laws,146 and could provide a basis for convergence around

a model that does not just give lip service to social responsibility, but gives it market

and legal strength.147

orientation to existing protections. Indeed, the evolution of many of the nation’s employment and

civil rights protections began at the state level and trickled up to the federal government.”). 145 8 Del. C. § 362(a) (“A ‘public benefit corporation’ is a for-profit corporation . . . that is intended

to produce a public benefit . . . and to operate in a responsible and sustainable manner.”); Leo E.

Strine, Jr., Making It Easier for Directors to “Do the Right Thing”?, 4 HARV. BUS. L. REV. 235

(2014); Memorandum from Martin Lipton 1 (May 2, 2018) (on file with author) (“[I]t is recognized

that ESG [environmental, social and governance], CSR [corporate social responsibility] and PRI

[the UN’s principles for responsible investment] are essential factors in sustainable long-term

investment to create growing shareholder value. If the purpose of a corporation does not include

ESG, CSR and PRI, it is unlikely that it will be able to create the sustainable long-term growth

being sought by the people for whom the investors are acting.”). 146 See Index of Codes, EUR. CORP. GOVERNANCE INST., http://www.ecgi.org/codes/all_codes.php

(last visited May 15, 2018) (collecting codes of various EU member states); HOLLY J. GREGORY

& ROBERT T. SIMMELKJAER, II, WEIL, GOTSHAL & MANGES LLP, DISCUSSION OF INDIVIDUAL

CORPORATE GOVERNANCE CODES RELEVANT TO THE EUROPEAN UNION AND ITS MEMBER STATES,

ANNEX IV (2002) http://ec.europa.eu/internal_market/company/docs/corpgov/corp-gov-codes-

rpt-part2_en.pdf (reviewing corporate governance codes of EU member states that show that often

the managers are required to act in the best interests of the company, taking into consideration the

interests of the shareholders, the employees, and sometimes even the general public). 147 The Benefit Corporation model institutionalizes the social responsibilities that Berle already

envisioned corporations to have. Adolf A. Berle, Jr., “Control” in Corporate Law, 58 COLUM. L.

REV. 1212, 1215 (1958) (“[O]ur conception of [corporate] control . . . is no longer solely an

attribute of stock ownership, though stock ownership plays a part. It is no longer merely a

definable portion of the bundle of rights held by stockholders, whether separable or inseparable

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And in terms of paying for a muscular, international global New Deal, we

know that Berle was not shy in his lifetime in supporting efforts to make the

privileged pay their fair share, and we also know that his understanding of economics

was sharp. Berle believed that large corporations and their controllers had generated

wealth in large measure because of help from government, and owed a

corresponding duty of social responsibility.148 Therefore, it would not be lost on him

from the stock itself. It is not a ‘thing’ but a function. It is essentially a variety of political

process—non-statist and therefore, in our vocabulary, ‘private,’ but with substantial public

responsibilities. The holder of control is not so much the owner of a proprietary right as the

occupier of a power-position.”); see also Adolf A. Berle, Jr., Modern Functions of the Corporate

System, 62 COLUM. L. REV. 433, 446 (1962) (“When I buy AT&T or General Motors, I do not

remotely ‘invest in’ either concern.”). 148 Berle anticipated today’s concerns about corporations hoarding unused capital abroad and

expending resources on stock-buybacks, rather than new investments in production growth. See,

e.g., Emily Stewart, Corporate Stock Buybacks Are Booming Thanks to the Republican Tax Cuts,

VOX (Mar. 22, 2018), https://www.vox.com/policy-and-politics/2018/3/22/17144870/stock-

buybacks-republican-tax-cuts (arguing that stock-buybacks “result in corporations giving billions

of dollars to their shareholders instead of investing in something more productive and broadly

beneficial to the economy”); Jim Tankersley, Tax Havens Blunt Impact of Corporate Tax Cut,

Economists Say, N.Y. TIMES (June 10, 2018), https://www.nytimes.com/2018/06/10/business/

corporate-tax-cut.html (arguing that “multinational corporations based in the United States and

other advanced economies have sheltered nearly 40 percent of their profits in tax havens like

Bermuda, depriving their domestic governments of tax revenues and enriching wealthy

shareholders”). Berle believed that corporations had a duty to engage in research and development

to advance technological progress and create the industries of the future. A New Look at

Management Responsibility, supra note 134, at 4 (“A well-run corporation ought not to have to

start looking around for something to do. Presumably it has a research and development

department whose precise business is to discover new needs, or better ways of satisfying old needs,

or development of new and useful products, or better ways of producing old ones.”). Berle also

believed corporations had a duty to put corporate capital to work to create community and job

growth. Id. (noting that the tax law favoring corporate rapid depreciation of assets was “offered

on the assumption that the corporations benefitting from it—that is, accumulating more capital

than before—will promptly put that capital to work and thereby support an increase in the

productivity, the employment, and the general economic health of the country. The hoped for

effect is that total product will be increased, that men otherwise unemployed will be kept at work

and put to work, that greater and newer product development will occur—because managements

do put this capital to work.”).

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that simply by asking for the huge winners over the last quarter century to pay more

sizable taxes, needed revenues could be found that would fund required investments

and stabilize guarantees critical to economic security.149 And by adopting Pigouvian

taxes on carbon and securities trades,150 huge amounts of revenue could be generated

149 E.g., BERLE & MEANS, supra note 64, at 356 (“Neither the claims of ownership [i.e.,

stockholders’] nor those of control [i.e., corporate managers’] can stand against the paramount

interests of the community.”); see also Adolf A. Berle, Jr., For Whom Corporate Managers Are

Trustees: A Note, 45 HARV. L. REV. 1365, 1372 (1932) (“Most students of corporation finance

dream of a time when corporate administration will be held to a high degree of required

responsibility—a responsibility conceived not merely in terms of stockholders’ rights, but in terms

of economic government satisfying the respective needs of investors, workers, customers, and the

aggregated community. Indications, indeed, are not wanting that without such readjustment the

corporate system will involve itself in successive cataclysms perhaps leading to its ultimate

downfall.”); see generally HENRY J. AARON, CAN TAXING THE RICH REDUCE INEQUALITY? YOU

BET IT CAN! BROOKINGS INST. (Oct. 2015), https://www.brookings.edu/wp-

content/uploads/2016/06/taxing-the-rich-you-bet-aaron.pdf (finding that a standalone increase in

the top tax bracket “would meaningfully increase the degree to which the tax system reduces

economic inequality . . . . even though it would fall on just ½ of 1 percent of all taxpayers and

barely half of their income”). 150 See N. Gregory Mankiw, A Carbon Tax That America Could Live With, N.Y. TIMES (Aug. 31,

2013), https://www.nytimes.com/2013/09/01/business/a-carbon-tax-that-america-could-live-

with.html?_r=0 (explaining that a carbon tax, which “would induce people to ‘internalize the

externality’” by “charg[ing] a fee for each emission of carbon” that is “built into the prices of

products and lifestyles” is, “[a]mong economists . . . largely a no-brainer,” pointing to a December

2011 survey of 41 economists, 91 percent of whom agreed with the statement that “‘[a] tax on the

carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than

would a collection of policies such as ‘corporate average fuel economy’ requirements for

automobiles.”); WILLIAM GALE, THE WISDOM OF A CARBON TAX: SURPRISINGLY, A CARBON TAX

COULD APPEAL TO BOTH LIBERALS AND CONSERVATIVES 3 (2017),

http://firstyear2017.org/essay/the-wisdom-of-a-carbon-tax (“Carbon taxes would contribute to a

cleaner, healthier environment and better environmental and energy policy by providing price

signals to those who pollute. Not surprisingly, most analyses find that a carbon tax could indeed

significantly reduce emissions. Gilbert Metcalf of Tufts University estimates that a $15 per ton

tax on CO2 emissions that rises over time would reduce greenhouse gas emissions by 14 percent,

while Jenny Sumner, Lori Bird, and Hillary Smith of the National Renewable Energy Laboratory

estimate that the European countries’ carbon taxes have had a significant effect on emissions

reductions, attributing reductions of up to 15 percent to a carbon tax. Furthermore, the University

of Ottawa found that the carbon tax implemented in British Columbia led to a 10 percent reduction

in greenhouse gas emissions in the province, compared to less than 5 percent for the rest of Canada,

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while helping to reduce carbon use through market forces and to reduce the

possibility of another financial crisis by reducing the incentives for trades without

economic investment value, and the churning of portfolios in reaction to momentary

trends.151 Last but not least, if the U.S., the EU, and the larger OECD community

stamp out tax havens and inversion arbitrage,152 the ability of large corporations to

continue to shift more and more of the costs of running societies from the privileged

many can be weakened and even reversed.153

where comprehensive carbon taxes were not applied.”); LEONARD E. BURMAN ET AL., FINANCIAL

TRANSACTION TAXES: AN OVERVIEW, TAX POL’Y CTR. 7 (Jan. 2016),

https://www.taxpolicycenter.org/publications/financial-transactions-taxes/full (finding that a tax

on securities transactions “could raise a maximum of about 0.4 percent of GDP ($75 billion in

2017) currently in the United States, allowing for reasonable behavioral responses in trading,

maximum revenue would occur if the base rate were about 0.34%”). 151 THE ASPEN INST., supra note 123, at 19 (summarizing studies indicating that a growing global

middle class—and associated higher incomes and consumption levels—will raise carbon

emissions, but that the income effect on carbon emissions may be mitigated by, among other

things, urbanization, because “rural households tend to have a higher carbon footprint than urban

households” due to carbon intensive transport). 152 The urgency of this task may have been fueled by the massive tax cut package passed by

Congress last year, as it provides more incentives to offshore not just assets, but also jobs. Reuven

S. Avi-Yonah, The Tax Act Actually Promotes Offshore Tricks, AM. PROSPECT (June 28, 2018),

https://www.prospect.org/article/tax-act-actually-promotes-shore-tax-tricks. More generally, that

law will cut taxes for corporations and the wealthy enormously, put long term upward pressure on

middle class tax bills, and create huge deficit spending that has already led to calls for cuts in core

New Deal/Great Society programs that reduce poverty, economic insecurity, and inequality.

Heather Boushey & Greg Leiserson, Worsening Inequality, AM. PROSPECT (June 28, 2018),

https://www.prospect.org/article/worsening-inequality; Matt Gardner, The Two Biggest Lies in

Donald Trump’s Tax Plan, AM. PROSPECT (June 28, 2018), https://www.prospect.org/article/two-

biggest-lies-donald-trumps-tax-plan. 153 See generally OXFAM AMERICA, BROKEN AT THE TOP: HOW AMERICA’S DYSFUNCTIONAL TAX

SYSTEM COSTS BILLIONS IN CORPORATE TAX DODGING 1 (2016),

https://www.oxfamamerica.org/static/media/files/Broken_at_the_Top_4.14.2016.pdf (reporting

that “[t]ax dodging by multinational corporations costs the US approximately $111 billion each

year,” and that the “same tactics corporations use to dodge US tax sap an estimated $100 billion

every year from poor countries, preventing crucial investments in education, healthcare,

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For all these reasons, therefore, it is likely that Berle would view a global New

Deal as a viable and compulsory objective. But what he would find most worrying

is the lack of voices willing to speak hard truths in a non-paternalistic way, to tell

workers that their futures do not rest in dirty coal mines but in new jobs that are safer

and more fulfilling, and that the way to conquer our fears is to marshal our huge

resources and talents, and to work together to create a nation and world where the

promise of a better life is made real for all our brothers and sisters. Where are the

leaders with the guts and conscience to be honest? To admit that we cannot turn

inward to solve our problems? To insist that we instead must boldly engage with

the world, to make even stronger than the forces of capital the institutions that

guarantee to people the rights essential to their economic security?

With the planet’s inhabitants now numbered in the billions, and the scope of

their impact on each other more substantial, the ability that we have to recover from

dawdling or, even worse, reversals in progress, is diminishing. To read Berle is to

recognize how complacent and defeatist we have become. His writings reflect the

infrastructure, and other forms of poverty reduction.”); KIMBERLY CLAUSING, CORPORATE

INVERSIONS, TAX POL’Y CTR. 6 (2014), https://www.taxpolicycenter.org/publications/corporate-

inversions/full (reporting that a Joint Committee on Taxation estimated that a proposal limiting

inversions would raise $19 billion over 10 years); Renu Zaretsky, Baskets of Billions, Inversions

and Revenues, TAXVOX (July 22, 2014), https://www.taxpolicycenter.org/taxvox/baskets-billions-

inversions-and-revenues (“Jobs might not necessarily go overseas when a corporation completes

an inversion, but a state’s tax base will shrink when a state’s formula to calculate its corporate

income tax relies on the corporation’s total federal income. In the absence of corporate inversions,

states would have received $73.1 billion in corporate income tax revenue between 2008 and 2012,

according to the Citizens for Tax Justice.”).

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confidence of earlier eras that despite two world wars, genocides, depressions, and

other catastrophes, the world was moving toward a better period for all, where the

liberties and rights fundamental to human happiness would be enjoyed by many

more of the world’s citizens. Berle’s writings are free of the timorousness and small

ball that characterize our national discussion of the right way forward. Berle revered

FDR in no small part because of FDR’s willingness to act to provide genuine hope

based on the reality of genuine progress.154 To the extent he faulted FDR, it was for

not being too bold in pushing the New Deal.155

At a time when our scientific and productive capacities are immense, we have

no legitimate excuse for being defeatist. With far less sacrifice than was asked of

prior generations, we can reduce economic insecurity for working people in our

nation, and help universalize the values we most treasure. But that won’t happen

unless the realism Berle exemplified is combined with his optimism and

commitment to a capitalism that works for all. When fear is rational, it does not go

away by ignoring it. It goes away when the sources of the fear are addressed with

154 Reshaping the American Economy, supra note 5, at 221 (“Franklin Delano Roosevelt has many

monuments in many fields. The result of his redirection of the federal state is not the least. Nor

is it the least expressive of the man himself: of his sympathy and his awareness; of his gay, even

ironic, appreciation of the defects as well as the merits of the American political system; of his

inveterate optimism (modified by kindly scepticism) as to human possibilities; of his

unconquerable belief that America could make of herself whatever she really wished to be.”). 155 Id. at 218.

82

skill and confidence. Berle’s recognition of that could not be more relevant to the

current moment.